How many taxing entities, administrators and board members have done their fiduciary duties by reading Chapter 313 of the Texas Economic Development Act?
Here are some of the Sections from Chapter 313, along with the requirements that the entities and their respected boards should consider before approving an abatement. If the requestor doesn’t meet those requirements, then we as board members, have a fiduciary duty to deny their request:
Section 313.003, Purposes. The purpose of this chapter are to:
1. encourage large- scale capital investments in this state;
2. create new, high-paying jobs in this state;
3. attract to this state large-scale businesses that are exploring opportunities to locate in other states or other countries;
Section 313.025, Action on Application
(f-1) Notwithstanding any other provision of this chapter to the contrary — including Sections 313.003 (2) or 313.004 (3) (A) or (B) (iii) — the governing body of a school district may waive the new jobs creation requirement in Section 313.021 (2) (A) (iv) (b) or 313.051 (b) and approve an application if the governing body makes a finding that the jobs creation requirement exceeds the industry standard for the number of employees reasonably necessary for the operation of the facility of the property owner that is described in the application.
Subchapter C. Sec. 313.051
(b) The governing body of a school district to which this subchapter applies may enter into an agreement in the same manner a school district to which Subchapter B applies may do so under Subchapter B, subject to Sections 313.052-313.054. Except as otherwise provided by this subchapter, the provisions of Subchapter B apply. For the purpose of this subchapter, a property owner is required to create at least 10 new qualifying jobs as defined by Section 313.021(3) on the owner’s qualified property.
In other words, EDP Renewables only needs three employees to manage their units, and the Era school district signed off on their application. Cooke County loses again.
EDP Renewables has been granted a Reinvestment Zone status from the Cooke County Commissioners Court. This allows them to seek abatements from the other taxing entities: Era School District; North Central Texas College; North Texas Medical Center; Clear Creek Water Shed; and Cooke County, along with the Muenster Hospital District, which denied their abatement.
Chapter 313 is a windfall for the school districts of sparsely populated counties of Texas. (“The state’s school finance laws require a district to be ‘kept whole’ which means every dollar a district waives in company property taxes as part of a Chapter 313 deal is, instead, paid to the district by the state.) Under such circumstances, school districts don’t have to wrestle with difficult questions about economic incentives”, according to the Texas Public Policy Foundation.
The Era district will receive the up-front sum of $10 million from EDPR. A school district windfall from Chapter 313 gives them an advantage over the other local taxing entities, forcing them to accept a smaller portion and having no say about the number of employees that EDPR should maintain on the payroll to qualify for an abatement.
With the increase of new commercial construction and new homes being built throughout the county (specifically in the southeastern Lake Ray Roberts area and the northeastern Callisburg area section), the location of the EDPR wind farm in the Era area – with the new homes being built there — is not the best use for that part of the county and since we also have them in the Muenster section.
I believe that when property owners are voted against their will regarding the giving of tax abatements, entities are using a form of the eminent domain process, while the property owners are being denied “just compensation” for their loss of property, landscape views and other issues. This would also fall in line with forced annexation. This is what I believe when taxing entities force their will on the property owner in the name of progress. At the same time taxing entities receive very little compensation compared to the life of the wind turbine: up to 30-plus years, property owners’ ad valorem taxes have no lifespan and do not expire.
EDPR has approached the Gainesville Hospital District asking for a 10-year, 80% abatement on the full tax rate in order to sustain the project as economically viable within Cooke County. They estimate that, over the next 10 years, the taxes paid to the GHD will be $790,000. It doesn’t take a mathematician very long to figure out this isn’t the way to estimate. The numbers don’t add up! If the GHD does not approve this abatement, like the Muenster Hospital District we could collect up to a million dollars in ad-valorem taxes over the 10-year life span of those units. In 2018 our tax abatement totaled $123,629,250. The collection of those ad valorem taxes could go a long way in satisfying the interest only we are paying for the next 10 years on our $39 million-plus bond debt. EDPR subsidies will continue long after any abatements have ceased. In fact, those subsidies will continue as long as those wind turbines produce electrical power.
I had a gentleman approach me and make this statement. If you are for a tax abatement, would you please pay my property taxes tax? The results to obtain an abatement is for someone else to pay their taxes.
Ken Arterbury, GHD board member, Whitesboro