The City of Sugar Land is required by Chapter 312 of the Texas Tax Code to adopt guidelines and criteria governing tax abatement agreements every two years if the City Council elects to be eligible to participate in tax abatements. The policy was last updated May 3, 2016 - with an effective date of May 20, 2016 - by City Council’s adoption of Resolution No. 16-15, which - among other things - strengthened provisions for minimal capital investment, altered the targeted industries to align with current recruitment trends, and added in more information to make the abatement process transparent for the applicant.
The use of incentives like the tax abatement is aligned with the City's most recent Economic Development strategic plan. No tax abatements have been approved since the adoption of Resolution No. 16-15 but the strengthened provisions are currently assisting in the negotiation of incentives.
It is important to note that the City does not lose anything through such value-added tax abatements, as the development would not have occurred without the tax abatement. Additionally, the tax abatement agreements are performance-based, so those receiving abatements must meet agreed upon standards to receive the full abatement amount. The projects result in significant property tax value and revenue to the City after the abatement expires, and economic growth generated by these agreements fully benefits the local school district - as they do not participate in abatements.
Resolution No. 18-16 follows the same guidelines and criteria set forth in the City’s current resolution, with no changes to the current tax abatement guidelines. With approval, the resolution will not be effective until May 20, 2018 after the existing resolution expires on May 19, 2018. As such, for purposes of Chapter 312 of the Texas Tax Code, this is considered adoption of new guidelines and criteria.
Staff recommends approval of Resolution No. 18-16 adopting guidelines and criteria governing tax abatement agreements in the City of Sugar Land to be effective on May 20, 2018.