HUTTO — While economic development advisors tout “you have to spend money to make money,” residents are starting to ask “how much is too much?” when it comes to city incentives and tax abatements.
“Don’t give away tax revenue without potential benefits in return. Hutto must not be known for waiving tax revenue just for the sake of development,” community activist James Weaver posted in a political commentary group.
Council member Randal Clark blames misinformation social media for the public outcry. Much of it concerned incentives for Project ESLO (Wolfcamp Development, LLC), an upscale strip center to be located on the southeast corner of Ed Schmidt Boulevard and the future Live Oak Street extension.
“I saw a lot of numbers thrown out on Facebook and I started reaching out to citizens. Once they understood it was a sales tax reimbursement and not the city cutting a $3 million check tomorrow, they completely understood what we were trying to do and why it made sense as a project,” Clark said.
Recent city meetings have found Clark and other council members clashing over how to approach incentives.
The incentive proposal for Project ESLO stirred tempers as council members argued over crucial points, not least of which was the funding sources.
According to city documents, the total incentive amount is $3 million, though council discussions used the number $2.7 million.
Funds from the Hutto Economic Development Corp. Economic Development Performance Agreement will contribute $1.5 million and an additional $1.5 million comes from HEDC and city sales tax reimbursement. The performance agreement term is 10 years and performance hurdles are required to earn each disbursement. The tax reimbursement term is 15 years and at no time is the city reimbursing 100% of the sales tax.
“The way I understood the presentation, $1.2 million of the $2.7 million is sales tax. There’s $1.5 million that’s not sales tax, the mayor told Clark.
“But it is, because it’s HEDC grant funds, which only come from sales tax revenue from other places in the city, so it’s still sales tax revenue generated only,” Clark responded.
“But that portion is not sales tax being reimbursed,” Council member Dan Thornton clarified. “It’s other sales tax subsidizing this project.” Aside from the funding, Snyder was concerned that details of the development presented to council were not already in writing as part of the Planned Unit Development zone. He was also concerned that the amount of support given to this particular project was not justified by the potential return.
“I’m still not sure of the benefits to Hutto. If we want to build retail and just grow to grow, then we can throw out a lot of money. To me we’re still giving too much away. I feel like we’re doing things that raise taxes on current business owners so someone else can come in and compete with them,” he said.
The mayor made a motion to table the issue until after details could be solidified in the PUD.
“You always say ‘time kills deals’,” Clark told the mayor, regarding the timing of tabling the issue. “We’re talking August before we even think about seeing it again. I just want people to be aware that doing it that way is a vote just to not do the project.
“Time does kill deals, but haste makes waste,” Snyder responded. “I’m just saying don’t give the incentives until you see the agreement they’re supposed to buiding by.”
The motion to table the proposal failed, and the proposal was approved by a 5-2 vote with only Snyder and Thornton voting against.
The next item on the meeting agenda was another incentive proposal, to create a 50% tax abatement zone at 3399 County Road 132, the Hutto Data Center Campus located in the Megasite. Details of the incentive were not available because of the rigorous legal process needed for approval, according to the city.
“Ironically, I completely support this one,” Snyder said.
The mayor contributed his support to knowing more about the company involved and having access to the financial impact the development would have.
“This one is the one that single-handedly almost doubles our revenues as a city when it’s built out, even after the 50% abatement.,” Snyder said.
Clark agreed. “As you said, the math on this one is extremely clear. It’s beneficial for the cicty and this is definitely the right move. 100% in favor of it.”
The motion passed 7-0.
