The Undercurrent: A first for Glen Rose — and hopefully not the last incentive to attract business

Kathryn Jones

By Kathryn Jones

Local government sometimes uses tax abatements to lure new business. But short of giving tax breaks, cities such as Glen Rose are using an economic development tool called a “Chapter 380 agreement” to attract new business, grow the local tax base, create jobs and help existing companies expand.

On Monday night, the Glen Rose City Council for the first time approved using such a tool to help local business MesaTech as it plans to expand. It debated the agreement behind closed doors in executive session, then members emerged and voted for the agreement.

MesaTech was looking for financial aid. The council granted a loan, but the terms are still being negotiated, City Administrator Ken West said Tuesday in response to this reporter’s question.

The company, which supplies checks, certificates and other security documents to banks, is located in the county’s industrial park on Bo Gibbs Boulevard. Last month Somervell County commissioners approved giving MesaTech a five-year tax abatement on the property.

Under the Texas Local Government Code, Chapter 380 is designed to help cities provide for economic development. The assistance can take the form of money, loans, city personnel and the use of city services, such as sewer lines. The Texas Constitution requires that spending public fund serve a “public purpose,” and in 1987 Texas voters approved a constitutional amendment allowing loans and grants of public money for developing and diversifying the state and local economies.

Read more about it here: http://www.tml.org/legal_pdf/Chapter380-Local-GovCode.pdf

MesaTech’s Chief Executive Officer, Mike Williams, came to the council last month and asked for some assistance with its expenditures as it expands its facility. The company plans to add about six jobs at wages starting at $12 an hour. Mesa Tech also plans to construct a 20,000-square-foot facility to the west of its existing structure.

“I didn’t think the council would go for abatement,” West said several weeks before Monday’s meeting. The city didn’t even have an abatement policy, he added.

“This has never been done before here,” West said. “The council will be trendsetters.”

Tax abatements are popular with businesses but generally not with taxpayers. They often build resentment – why did this group get a tax break, but this other one didn’t? Cities often use abatements as an incentive when a company wants to build a major plant, for example, or relocate a corporate headquarters.

MesaTech will receive a five-year abatement from Somervell County – the land in the industrial park is owned by the county. The abatement is worth more than $2,100 based on the current tax rate on the property, which is valued at $600,000. Williams also asked the county to reserve five acres in the industrial park next to the company for future expansion. Commissioners didn’t want to go that far, but they did give MesaTech the right of first refusal if someone else made an offer for the property.

Another business, Rountree, an appliance and furniture retailer with stores in Clifton and Hamilton, also approached the council about granting a 380 agreement to help it buy inventory and move into the metal building that previously held Dollar General. The council, however, did not outright grant its request and directed the city staff to do more “investigation” and come back to the council with recommendations.

West said using the 380 agreement will give the city/county Director of Economic Development Billy Huckaby “some tools to put in his toolbox.”

In contrast to tax abatements, which cannot run for more than 10 years, the 380 agreements can be extended for longer periods of time and allow for more flexibility.

West believes that as word gets out that the city is willing to use the 380 tool, it will attract more business.

“It allows the city a lot of latitude in what it can give,” West said. “The 380 agreement can be structured so everybody wins.”

Much remains to be done in attracting more business to Glen Rose, to be sure, but this is a start in the right direction. What the city staff and council did in coming together to approve this agreement can help put the word out that Glen Rose is open for business.

Now the businesses just need to come.

Kathryn Jones is editor of the Glen Rose Current. 

One Response to The Undercurrent: A first for Glen Rose — and hopefully not the last incentive to attract business

  1. CHARLEY THOMAS Reply

    June 5, 2013 at 7:46 pm

    I HOPE THIS SIGNALS A TURNAROUND IN OUR LEADERS POSITION REGARDING MUCH NEEDED LOCAL JOBS AND EXPANDING AND BROADENING OUR TAX BASE. WE MUST TRY TO KEEP OUR TAXES AS REASONABLE AS POSSIBLE AS LUMINANT’S TAX VALUE DECREASES. MEANWHILE, HEALTH CARE COSTS ARE RISING SIGNIFICANTLY AND, IF WE WANT THAT CARE TO BE CONVENIENT, WE MUST PAY A LITTLE BIT MORE. ANOTHER POINT RE THE FURNITURE STORE (RETAIL)–I NOTICE THAT RETAIL SALES TAXES IN THE CITY PROVIDE ALMOST AS MUCH REVENUE AS PROPERTY TAXES–SO WE NEED ALSO TO ENCOURAGE RETAIL GROWTH.

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