Aransas County commissioners held public hearings. Thursday, Nov. 4 in regard to a proposed Aransas County Economic Development Policy, which includes guidelines and criteria for tax abatement as authorized by Chapter 312 of the Local Government Code, and guidelines and criteria for tax rebate agreements and other incentives as authorized by Chapter 381 of the Tax Code. A second hearing followed about the proposed creation of an Aransas County Economic Development Evaluation Committee.

Prior to the two hearings, the court discussed the items to be addressed in the hearings, as well the proposed application forms.

(Note: Michael Meek with Meek and Associates, LLC presented recommendations to the Aransas County Alliance Local Government Corporation – LGC - at its meeting Oct. 1.

Recommendations for the County included tax abatement guidelines and criteria policy, and Chapter 381 community and economic development program policy. Recommendations for the City of Rockport included tax abatement guidelines and criteria policy, Chapter 380 economic development program policy, Tax Increment Reinvestment Zone policy, and Public Improvement District policy.

Meek followed up Nov. 11 in a meeting with Aransas County commissioners at which he presented, and the court briefly discussed, recommendations for economic development policies, programs, guidelines, and criteria to include in a County Resolution adopting guidelines and criteria for tax abatements and rebates pursuant to Chamber 312 of the Tax Code, Property Redevelopment and Tax Abatement Act; and, recommendations for the County to adopt a Community and Economic Development Program pursuant to Chapter 381, County Development and Growth, of the Local Government Code; and additional recommendations and options for Economic Development policies.)

Meek’s presentation Nov. 4

Meek, a former Rockport resident who started his company after retiring from his position as President/CEO of the Greater New Braunfels Chamber of Commerce, opened his presentation saying, “This is just another step in recovering from Hurricane Harvey.”

He reviewed what has been accomplished since Dec. 2020, leading up to Thursday’s hearings, and discussion by the court.

The reasons for updating the county’s guidelines for incentives include:

• Lowering unemployment

• Strengthening local businesses

• Increasing tax revenues

• Attracting jobs

Meek said when he was hired to help update the county’s guidelines he first looked at the studies conducted, focusing on those completed after Harvey.

“All the studies (post-Harvey) helped determine what would make Aransas County more sustainable,” said Meek.

“Aransas County’s dominant business sector is hospitality and tourism. Harvey’s impacts proved the need to better diversify the economy and this sector.”

Targeted compatible business sectors (that would help diversify the local economy) include:

• Aviation related

• Corporate and regional offices (Aransas County positioned well for this due to explosion in tele-commuting, but needs expansion in broadband)

• Information technology

• Major tourism entertainment venues

• Marine related

• Medical (Aransas County has made strides in the area, but there is a need for more since residents have to leave county for many medical services)

• Post-secondary education (Aransas County has made progress in this area securing the Workforce Development Center with Del Mar College)

• Research and development

• Retail and commercial business centers (A lot of money leaves Aransas County)

• Workforce housing (many affordable housing units were destroyed by Harvey)

“That’s 10 areas (compatible business sectors that can be developed) in Aransas County,” said Meek.

“Economic development is basically bringing in new money to the community.”

He noted Aransas County benefits from some types of money from outside the county, such as transfer payments (Social Security, annuities, etc.), and tourism (tourists spending money while visiting), but added, “What’s really missing here is primary employers (make product here and sell elsewhere).”

He said growth in primary jobs is the foundation for sustainable prosperity, and essential conditions that businesses require to locate in an area are an adequate skilled workforce, quality of life, and quality infrastructure.

Meek said 94% of all communities in the state use incentive policies as a means of securing a location for new businesses, expanding current businesses, or retaining current business.

“Without (incentive policies) you’re behind (other communities),” said Meek.

He noted not all incentive policies are good.

“They need to benefit the community, not just the business,” said Meek. “They should be used properly in a manner designed to maximize your expected return on investment (ROI) of public resources.”

He noted the different chapters in the State’s Tax Code (312, 381, and 311) being considered in the county’s policy can provide tax relief to residential taxpayers.

Meek said currently Aransas County residential taxpayers carry 87% of the property tax burden. The statewide average is about 40%.

He said his hometown, New Braunfels, is in Comal County, and residents carry about 54% of the property tax burden.

Meek then shared his responses to select comments received via different forums.

The comments (C) and responses (R) are as follows:

C - Strike housing from targeted business sectors.

R - While homes are being built, most are not defined as workforce affordable.

C - Growth already occurring.

R - While sales tax and occupancy tax revenues are doing well, many key sectors are not growing or present at all. The commercial tax base as a percentage of the total base is very low, putting undue pressure on the residential taxpayer to fund services.

C - We need an economic analysis of these polices before adoption.

R - These are only guidelines and criteria. There is nothing to analyze until there is a specific proposal before the county. These guidelines provide the process for analyzing a proposal for its impact on the county.

C - Lots of these ideas are old and not from local organizations.

R - Aransas County was fortunate to have so many organizations like TAMU, TAMUCC, IEDC, IC2, and more to provide their vast expertise at no charge. Most utilized citizen input from meetings, interviews, and focus groups.

C - The coming Workforce Development Center doesn’t make sense.

R - All local governmental entities supported the center. It makes perfect “cents” for those fellow citizens desiring a better life. Hundreds upon hundreds of communities have such facilities, as it is a key piece of any economic strategy for a community.

C - No case studies were done on these policies.

R - These policies relate to specific chapters in Texas state law. Hundreds of Texas cities and counties use these incentives daily.

C- Economic development is destructive to the natural environment and doesn’t work anywhere.

R - The targeted business sectors recommended are eco-friendly and are needed in Aransas County to sustain and enhance your quality of life. 94% of Texas cities and counties utilize economic development strategies each and every day because they work.

C - We don’t want to be like New Braunfels and Comal County.

R - Aransas County has a unique brand and culture. The suggested target business sectors and policies clearly reflect that.

C- Incentives cost taxpayers.

R - Not true. The policies are designed to place the county in a control position and ensure that there is an acceptable rate of return to taxpayers for each project. No current values are involved and additional county revenue is the result.

C - The LGC and EDC are secretly forming new taxing districts.

R - Not true. The LGC and EDC have no such authority. The policies recommended clearly outlines that the Commissioners Court is solely in charge of any proposals.

C - We should not fund businesses with bonds.

R - You aren’t. Any bonds issued would be for public infrastructure.

C - Emphasize workforce housing more.

R - We agree. It is one of the key targeted business sectors recommended. Workforce housing is beneficial to helping recruit employees to remain or live in the area.

C - Medical doing well; don’t need to emphasize that.

R - While progress is being made on one key need of care, there are many other pieces to health care that will remain lacking here. Hundreds and hundreds of county residents leave the county daily for medical care, taking with them money that is spent outside the county.

C - These policies won’t help Commissioners Court provide additional services to constituents.

R - Having new wealth (commercial tax base) will provide the county with additional funds to allocate to projects and services like drainage and street repair, law enforcement, and more.

C - We are duplicating efforts by having incentives at the county; the EDC handles this already

R - The EDC is a marketing and promotional organization. They have no authority to adopt incentive policies. That is a governmental function in the State of Texas.

C - Gambling is planned for the Harborfront project and TIF’s will be used.

R - We are unaware of any such initiative. Plus, casinos are illegal in Texas. Tax increment financing (TIF’s) is a city tool for public infrastructure improvements that counties have the option to participate in.

C - Existing businesses are not qualified for incentives.

R - They certainly are. The county legal team drafted policy clearly says existing businesses qualify.

C - The US Supreme Court and South Dakota has ruled TIF’s illegal.

R - Not to our understanding. The Texas Attorney General allows cities to utilize this public infrastructure improvements mechanism. Counties may participate via interlocal agreements with a city should they choose to.

After presenting his responses to previously raised questions and comments, Meek said, “It’s time to take that next step in the economic recovery of Aransas County.”

Commissioners then discussed the proposed policy, as well as the information provided by Meek in his presentation.

Commissioners’

discussion

Commissioner Pat Rousseau asked the most questions and provided the most comments.

She first noted TIFs are not legal in North Dakota (not South Dakota, as mentioned in aforementioned comment/response).

Her comments are summarized as follows:

• Would rather see five members on the evaluation committee, as opposed to seven (or more), since the court usually appoints five to committees with each commissioner selecting a member.

• Have eligible Reinvestment Zones been determined? Meek said no, that is part of the process.

• I’m against Tax Increment Financing Assistant County Attorney Jennifer O’Steen noted the part Rousseau was referring to was definitions.

• Addressing tax rebate agreements, Rousseau said she opposes the county granting/loaning money.

• Questioned the need for a super majority (four of five commissioners) to rescind a policy that can be approved by a simple majority. Rousseau and Commissioner Wendy Laubach believe a simple majority should be able to rescind a policy if a simple majority approves it initially. O’Steen later said she had to check how the policy and the law is written, and that she had misspoken because she was not looking at the correct information.

• Questioned the number of variables a company has to meet (of those listed) to be considered for incentives. O’Steen said commissioners will decide that. She said incentives can be based on many different variables, and the court makes the decision if a plan meets the requirements of what the court wants to do.

• Would like to see the maximum allowable rebate to be 20% for nine to 10 years, not 30%

• Asked about the process, as in who determines what is given to a particular company. Meek said the general process would be to go through the county judge, then to the evaluation committee, and then back to commissioners for the final decision. The court will always make the final decision, regardless of what the policy offers. Commissioner Jack Chaney said the county staff is just advisory, with possible outside input. “They don’t make the decision,” he said. Osteen noted the court doesn’t have to offer anything (just because it’s in the policy).

• Questioned having an agenda item calling for a decision about an incentive at the same time the public hearing is held. Laubach said she would like to see a 60-day period, that includes 30 days for the public to evaluate before a hearing, and another 30 days after the hearing before the court makes its decision.

• Questioned applications for refund or tax abatement being turned into the County Judge. O’Steen said all applications would be turned into a central place (i.e. – County Judge) and then distributed to the appropriate parties (i.e. - evaluation committee).

• Rousseau noted Meek said Aransas County was out of whack in terms of how much of the property tax burden is borne by homeowners, and added, “Many of us moved here because of that ratio.” She said she would rather see incentives back-loaded, versus front-loaded, so a business can’t take advantage of an incentive in the beginning, and then close up shop. She used Schlitterbahn in Corpus Christi as an example of front-loaded incentives that didn’t work out.

Laubach then presented her comments and concerns.

She said businesses that make decisions using their money should have a business plan that is self-sustaining.

“The last thing we need is a business that can only make it with incentives,” said Laubach.

“If you can come here and make it you should,” but not with our permission and (money).”

Laubach also called for applications (for incentives) to be made public.

“I know some things have to remain secret. But, I always have a problem with decisions being made behind closed doors.

“If they are truly trade secrets (being kept secret), I can understand,” but added everything else should be made public.

Noting Meek said 94% of communities utilize incentive packages, she said, “I’d like to see us be different. Everything above board. The playing field the same for everyone.”

She said the county should be made attractive for businesses without handing out checks.

Noting that mobile homes, manufactured homes, and similar such structures are the county’s inexpensive housing, Laubach said such housing won’t be welcomed until the time the community accepts that we can have something other than mansions on the water.

Commissioner Jack Chaney said he never liked the requirement of a super majority to make a decision, and is in favor of a 30-day notice (before a decision about an incentive is made), after the public hearing.

He said, “We can draw this (policy) out and make it a hot topic,” and added he supports the policy.

“Tax abatements (for instance) work,” he said. “The question is, ‘What do we want our children to do?’

“We need to diversify our economy,” and added it’s hard to live here without a good job.

“I think this is a really good deal,” said Chaney. “We need to look at everyone in the county.

“If the county brings in additional money, it’s a good thing … (takes some pressure off residential taxpayers).”

Laubach reiterated that RVs and mobile homes are the county’s affordable housing.

“We need to quit regulating them out of existence,” she said.

Aransas County Judge C.H. “Burt” Mills said O’Steen spent several hours re-writing what Meek sent her initially.

“She has pointed out what’s best for Aransas County,” and added he understands some of the things that might need to be changed.

“But, overall, I don’t see a problem (with the document),” he said.

Commissioner Bubba Casterline said his whole life he has heard how we need to do something to help keep our children here.

“But, that’s all we’ve done – talk,” he said.

“I’m not big on tax abatements, but there are some companies that could benefit.”

Aransas County Auditor Jacky Cockerham said she wants clarification about what is being rebated (what taxes).

“It could really affect our debt rate,” she said.

Chaney said he believes only the maintenance and operations portion of the tax rate can be abated.

Public

hearings

The final part of the meeting was the public hearings.

Melissa Esquivel said the whole topic of an updated policy is intriguing to her.

She said she wants to know if something is going to work, and if it does work, the county needs to do it, but added there is a lot of misinformation in regard to actual outcome of incentive programs.

She said in her investigations about such programs, a common statement is there’s not enough information to determine if incentives actually help.

Esquivel said programs that have been used for 30 years; she can’t find statistical data to support it.

To avoid legal issues with companies, she suggested tax abatements be offered for a maximum of five years.

Nancy Bolting pointed out the many negative comments aired in public and social media about recent development, such as the Workforce Development Center.

“People said that would cost us money. That’s not true,” she said. “It’s (also) embraced by our new (school) superintendent.”

She said she hears a lot of negative talking, but not the positive, but noted the positive people are out there.

“I think tax abatement will work,” she said. “I recently had to close one of my businesses (because the rent went up).”

Bolting also noted what the commissioners are considering (economic development policy) does not commit them to allow anything that is in it.

Katy Jackson, a member of the Rockport City Council, said, “I’m ambivalent about these policies. I don’t think government should pick winners and losers, but there are a lot of things to consider.

“These are guidelines and criteria, and that’s all it is.

“Slow forward may be the best thing.”

In regard to the number of people serving on the evaluation committee, Jackson said, “It doesn’t really matter. They can approve anything, but y’all (commissioners) make the final decision.

“You could approve this (policy), and never approve a tax abatement.

“We ask that you make the best choice with the available information.”

Jennifer Shaw she has been a real estate lawyer for 40-plus years.

“All this discussion is old news to me,” she said.

Shaw also said she prefers short-term tax abatements.

“You need to word your documents so that if the property is sold (or the majority of it is sold), then the abatement ends,” she said. “Those are key points you need to keep in mind.”

Shaw said she learned a valuable lesson early on.

“Don’t ever agree to a deal you don’t understand,” she said.

Kristie Rutledge said she is glad to hear from legal experts (i.e. – Shaw).

She said there are a lot of reasons given for making up these new economic development policies, including the outcome of studies done after Harvey, attracting outside talent, and creating a regional economy headquartered in Rockport.

“There’s a lot here (in this policy),” said Rutledge.

She noted the EDC was assigned to write the policies.

“I thought (it was) interesting people with vested interest were asked to write these documents,” she said.

“Who is monitoring the reports from the two current deals (Rockport Harvey Housing and Ace Hardware)?”

She said the price of subsidized housing has gone up since Harvey, and residents are paying for the infrastructure for those properties.

“We need full disclosure of everything,” said Rutledge.

She alluded to the projects rejected in the past by Aransas County voters, and noted a TIF would capture taxes in a particular zone and take funding away from the school system.

Shana Brader said there are many people who are interested in infrastructure and growth.

“I’m in support of the EDC, abatements, etc.,” she said.

Laubach said, “I want us to be attractive to businesses.”

Braden responded, “Adopting this does nothing. All the decisions are in your (commissioners’) hands.

Judge Mills said, “Commissioner courts in the future will have control, as well.”

Mills then moved discussion to the creation of the Aransas County Economic Development Evaluation Committee and the appointment of initial committee members.

“I don’t know that we’re at that point yet,” he said.

Casterline said the court might want to consider people from different county departments for the committee.

“What you want to have are people knowledgeable who can help commissioners make their final decision,” said O’Steen. She said different backgrounds will bring valuable input.

Laubach said the five commissioners should have the opportunity to approve one member of the committee.

Rousseau said she does not object to having more than five people on the committee as long as each commissioner can appoint one person, and then others added.

Commissioners then briefly discussed the application forms.

The court took no action on any of the items on the agenda. They were only on the agenda for discussion. Action will be taken at a future meeting(s).

Meek’s final comment was that in his 33 years with the New Braunfels Chamber, maybe one applicant per year made it to the finish line.

“These (incentive packages) aren’t going to happen very often. The vetting process is grueling,” he said.

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