County sets guidelines for new tax breaks

On Tuesday, the Collin County Commissioners Court discussed ways in which it will introduce its tax breaks for new businesses opening their doors next year.

The court was presented two tax incentive options to build upon and approved one that gives a property tax rebate to new businesses while also giving municipalities the ability to tailor the rebate to the needs of their community.

The intent of these tax breaks is to provide an efficient means of providing county incentives for local economic development, creating new jobs and increases in real and business personal property in return. Qualifying business will receive a tax rebate equal to one half of the applicant's county taxes for each of the first three years of the program.

A separate tax abatement policy, which would serve to reduce the taxable value of a business over a longer period of time, was also discussed and is scheduled to be drafted and resubmitted before the court at a later date.

The approved policy, to be adopted pursuant to Local Government Code 381, will allow cities to determine what types of businesses might be "of concern" or "counterproductive" for their reinvestment zones. Some hypothetical examples given were gaming rooms, slaughter houses, pawn shops, salvage yards, liquor stores and sexually oriented businesses.

"The commissioners court has the desire to be able to say "yay" or "nay" to who we give this credit to, so in order for us to do that the most effectively, we should head down the path of a more individual approach," said Commissioner Matt Shaheen.

In order for there to be such a screening process, however, the challenge will be setting a clear set of criteria in place to adequately justify those applicants who may be turned down, said presenter Jim Shepherd of Shepherd Law Firm.

"It looks to me like we ought to add the city's input," County Judge Keith Self said. "We are going to have to see the language on the businesses not covered."

The court returned a short list of suggestions to its administrative services department, which will present the program to the cities individually for addendums, if requested.

Once a new business is approved, its tax value on Jan. 1 of the following year and the taxes paid on that value will determine the amount of the incentive paid. Each year of the 381 agreement, the business will submit a notarized annual certification form with a tax receipt for the annual rebate.

Aside from the type of businesses eligible, the court also grappled over business size.

Commissioner Duncan Webb expressed concern over the program's taxable value minimum no less than $100,000 in 2012 due to the strain it could have on the county's administrative costs depending on the number of businesses it the incentive attracts.

"If we have whole bunch more businesses coming in, we could have cost go way over when we're still in a (struggling) economy," Webb said. "I'm not sure what the exact administrative cost will be but I think it's pretty obvious that with those little small abatements that (it) will be more than what the actual abatement is. It's counterproductive."

Shaheen suggested bumping that number up to $250,000, coinciding with Webb's suggestion that perhaps the incentive program could turn out to be an "expensive experiment."

"I know $100,000 might be a lot, but we are trying to send a message that we are open for business and that we support our local businesses," said Commissioner Joe Jaynes.

While Webb said he was trying to expand the tax base, Commissioner Cheryl Williams said she is trying to expand jobs, as well, and felt setting the tax values at a $100,000 minimum and $500,000 maximum was reasonable. The court agreed to look more into employment numbers as well during the application process to be sure it will add a notable number of jobs.

"The primary purpose of this [tax incentive] was employment, it was intended to create jobs," Williams said. "That was the primary function, not [to promote] taxable value but jobs."

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