An ad valorem tax exemption used by communities to potentially spur economic development was given the green light from Hays CISD leaders late last month.
By a 6-0 vote with one abstention March 27, the Hays CISD board of trustees approved implementing the Freeport exemption, which is a form of property tax exemption for certain manufacturing companies in the area. At-large trustee Sandra Bryant chose not to vote on the item.
The board rescinded a 1989 resolution that denied the exemption for Freeport goods, thereby allowing Hays CISD superintendent Michael McKie to execute Freeport agreements with eight companies.
Under the Freeport exemption, businesses are exempt from taxation of goods, wares, ores, aircraft parts and merchandise if they have inventory that is in the state for 175 days or less, according to the state’s comptroller’s website. Oil, gas and petroleum products do not qualify under the state’s Freeport exemption, which was implemented in 1989.
The board’s decision to act on the exemption closed a process that has taken more than a year to complete. Holly Raymond, Hays CISD board president, brought the item back for trustee review last year.
However, she said she wanted the district to do its due diligence on the exemption, to where Hays CISD “wouldn’t be placed in a negative position in the near term.”
While the district stands to lose $700,000 in revenue the first year of the exemption, “hold-harmless” agreements with eight businesses would counterbalance the loss.
Companies would agree to pay 100 percent of the Freeport tax the first year of the agreement and would reduce the amount by 25 percent over five years.
Ann Miller, Buda Economic Development Corporation executive director, said during public comment March 27 she supported the exemption. Miller said she hoped trustees saw it as a “win-win not only for the school district, Buda and Kyle and Hays County, but the community and residents in general.”
While Miller said she understood the apprehension of applying the exemption, which is irrevocable, the benefits outweighed potential concerns.
Miller used a recent skydiving venture, where she said she trusted the professionals with her safety. Miller said projects were “anxiously awaiting approval” of the Freeport from the board.
Both the cities of Buda and Kyle, along with Hays County, have passed resolutions implementing the Freeport exemption.
“As an economic development professional, I’m asking you to trust me,” Miller said. “We’ve packed the parachute. You’ve got a great team in Buda and Kyle. We’re going to bring those new businesses in.”
Kyle Chamber of Commerce CEO Julie Snyder said she supported the Freeport exemption.
Travis Mitchell, Kyle City Council District 1 member, supported the exemption, but also understood arguments on both sides of the issue.
However, with other entities passing Freeport legislation, Mitchell said not having it could push new business away from Hays CISD.
“If we don’t pass it, new business will not come that utilize (the Freeport exemption),” Mitchell said. “They could go to every city within 15 to 20 miles from here to find much more welcome arms and tax policy.”
Bryant, however, was hesitant about the irreversible nature of the exemption and chose to abstain from the vote. However, Bryant said she understood some of the benefits to businesses in the area.
The majority of board trustees also supported the policy. Bert Bronaugh, District 3 trustee, said the measure was a “win-win” for the district. District 4 trustee Merideth Keller said she was excited to move forward with the exemption, and was “super excited” at future potential partnerships.
“We could do some great things if we work together,” Keller said. “I see that future and I think it’s going to be pretty bright.”