Posted on 06/22/2004 5:23:29 AM PDT by Arrowhead1952
District debatiung policy that would allow incentives for Home Depot data centerx
By Shonda Novak and Robert Elder Jr.
AMERICAN-STATESMAN STAFF
Tuesday, June 22, 2004
The business of tax breaks may be ready to boom once again in Austin.
Austin Independent School District trustees Monday night debated whether to adopt a policy permitting tax breaks to lure companies. It could pave the way for the district's first effort under a 2001 state law that lets school districts offer tax breaks for major economic development projects.
The district itself wouldn't lose any revenue; the state essentially subsidizes districts that grant property tax breaks under the law.
The school district discussion was triggered by the recent disclosure that Home Depot Inc. is considering opening a data center in Austin that could bring 500 jobs. On Thursday, the Austin City Council will consider offering Home Depot tax breaks worth $7.2 million over 10 years, with more expected to follow from the State of Texas and Travis County.
Mel Waxler, general counsel for the school district, said he's "aware of the possibility of one or two other companies" besides Home Depot asking the school district about tax breaks, although he stressed that no company has formally approached the district.
"With all this activity, the district wanted to get ahead of the curve," Waxler said. "We wanted to make certain we had a policy in case (companies) started with applications" for tax breaks.
On Thursday, the City Council also will consider $4.3 million worth of tax breaks for Samsung Austin Semiconductor, which started work last summer on a $500 million expansion of its chip plant in Northeast Austin. The expansion is expected to add 240 jobs.
In the past year, the region has intensified its economic development efforts and become more aggressive with incentives. Last year, the City Council approved one of its largest subsidy agreements ever, a 20-year package of tax breaks worth $37 million for the Domain, a planned shopping center and apartment development in North Austin.
The Domain was the first such project to win tax breaks under a new city policy that links incentives to meeting specific goals, including jobs and sales taxes generated. It was also one of Austin's biggest subsidy agreements since 1998, when the city lured Computer Sciences Corp. downtown.
The Home Depot data and tech center would be bigger than the data center Oracle Corp. opened in Austin last year with incentives from Austin Energy. Oracle bought an empty AT&T Corp. data center and has filled it with thousands of computers and servers. That center started with about 40 employees and has grown.
Home Depot declined to discuss salaries at its planned data and tech-support center in Northeast Austin, but city and county officials say the average salary would be between $50,000 and $60,000 a year.
The newest suitor for Home Depot may be the Austin school district.
Waxler, the school district's general counsel, said Susan Davenport, director of economic development for the Greater Austin Chamber of Commerce, notified the district three to four weeks ago about Home Depot's interest in putting a data and tech-support center in Austin.
Home Depot already has a 158,300-square-foot data center at 1300 Park Center Drive under contract.
"This is a matter that is very new to AISD; we're pretty much learning as we go along," Waxler said. "I do know the district is likely to look at this, if and when we can ensure that ultimately there is no loss of tax dollars to the district."
Mike Rollins, president of the Austin chamber, said he would encourage the school board to adopt a policy allowing tax subsidies for economic development.
A 3-year-old state law allows large school districts to exempt hundreds of millions of dollars worth of new property from school taxes to attract jobs.
In a school district the size of Austin, for example, a business would have to establish a facility valued at a minimum of $100 million on the tax rolls.
The law calls for a new business such as the Home Depot data center to be fully taxed for the first two years. In the third year, the facility's taxable value would be capped at $100 million, regardless of its value.
Home Depot is expected to spend far more than $100 million to purchase, update and equip the center, which would manage huge volumes of sales, customer and other data from its 1,769 stores.
In year 11, the property would go back on the rolls at its true value.
School districts generally don't lose money under the scheme. Any tax breaks the Austin district granted would be deducted from the money the district has to pay the state under the state's share-the-wealth tax distribution system.
The state loses money when it reimburses school districts. Supporters of the 2001 law argued, however, that the state would actually gain millions of dollars from the additional jobs and investment in Texas.
Dan Casey, an Austin-based economic development consultant for the Austin school district, said roughly a dozen school districts have granted tax breaks under the law.
The highest-profile case so far is the Plano Independent School District's recently approved plan to save Texas Instruments an estimated $200 million to $230 million in school taxes over 10 years.
Tax breaks clearly do work, but things like the above still seem bizarre to to me. The rest of us pay for them, and they distort the economy. I think they should be outlawed.
After that windfall of taxpayer funded profit, Home Depot moves it's operation to India while "conservatives" say they should be able to move if they want and they shouldn't be taxed anyway.
I thought Austin hated big chain stores?
Certain areas here (tree hugger zip codes) won't allow big chain stores in their neighborhoods. The more conservative zips have every big chain store you can imagine. There is one area close to my home that has five HEB food stores within a 10 mile area.
Aha! I used to live in Austin. Does the city council drive you insane? It used to drive me nuts when I was there.
Does the city SILLY council drive you insane?
That is what we call the city leaders here now!
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