2014 Property Tax Abatements- Are They Justified?

My answer is YES!

Since I was elected to the Board, I have found each time the Township Board grants a property tax abatement to a company I can pretty well expect to receive an increase in emails and comments about a “deal” being given to some company at the expense of the rest of us. An example is an email I received stating “Not that I'm trying to soak businesses, but seems like they could pay their "fair share" of the Woodlands Tax burden.” I do not object to the questioning; any question is a good one. But, I would like to provide my perspective as I do not believe the Board is “throwing your money away.” On the contrary, I think these abatements are driven by the competitive market and the need to bring new jobs to our community. If used wisely and only where the competitive environment dictates, the use of property tax abatements will, both in the short and long term, increased property tax and sales tax revenue which will help lower our property taxes. 

The Township’s Tax Abatement Policy mirrors that of Montgomery County. We rely on J.R. Moore, County Tax Assessor, to do all the evaluation work, and a lot is involved, keying off his recommendation. After I was elected in 2012, I wanted to confirm for myself that the Board was not just “blindly” following the County’s lead and that there was substance behind any abatement decision. So, I met with Mr. Moore to understand our policy and what he does in evaluating all potential abatements in developing his recommendations. Personally, I found that Mr. Moore leaves no stone uncovered in evaluating every abatement request. I thought he did, and continues to do, a very thorough job in making sure no one is giving anything away unnecessarily and considering the best interest of the tax payers. 

The following abatements have been approved by both the County and The Woodlands Township: 

The Woodlands Township Property Tax Abatements
Company	2014 Market Value	2014 Abated Value	2014 Taxable Value	Expires	Est. New Jobs (Note1)
Anadarko	185,158,000	53,683,860	131,474,140	12/31/02	450
ARC Holdings	28,199,840	23,306,900	4,892,940	12/31/15	379
Fox Network	18,878,450	1,642,110	17,236,340	12/31/15
Chicago Bridge and Iron	15,697,410	Under Construction	15,697,410	12/31/22	200
Clarient	2,613,940	2,163,090	450,850	12/31/19	85
Repsol	5,456,750	4,005,000	1,451,750	12/31/22	368
RPC	8,235,350	3,699,270	4,536,080	12/31/17	154
Us Oncology/McKesson	28,648,860	27,812,510	836,350	12/31/17	599
Total	292,888,600	116,312,740	176,575,860		2,235
2014 Township Property Tax Rate(per $100)		0.2940	0.2940
Abated Property Taxes		341,959
Taxable Revenue To Be Received			519,133
Note 1 Job estimates per JR Moore's July 13 Countywide Abatement Report
Note 2 The above abatements are based on 2103 property tax valuations. These abatements will reduce the Township's property tax revenue to be received in 2014.

 

At our current tax rate of $.2940/$100, the value of these abatements is $341,959.  This is up from 2013 due principally to several abatements granted in 2012 and 2013 (Anadarko, US Oncology, Repsol, Clarient). Even so, the 2013 abatement does not seem to be a large amount given the competitive situation we face and the jobs that have been created (estimated by JR Moore to be 2,235 new jobs).  Eventually when these abatements expire, The Township will add an additional $116 million to its tax role. Today, these companies are paying $519,133 in property taxes on their unabated value. Our total 2014 Property Tax Revenue is budgeted at $42.4 million on an assessed value of $14.5 billion. Our 2014 abatements are only .8% of our total property tax revenue to be received in 2014 (2013 was .4%).

In December, The Township Board approved a new abatement for Exxon/ Mobil. They will house 1,400 people in two new buildings to be built in Hughes Landing. The estimated salaries of these people are $179 million. Exxon/Mobil could have chosen to build a new building at their Springwoods complex but thought the Township offered a better economic deal. The new buildings will add $117 million to our tax roll. The abatement, estimated to be $341,000, will impact our 2015 property tax revenue and bring the total of our abatements to approximately  $683,000, 1.5% of our total property taxes. 

In competing for new business, the County and Township have few financial incentives to offer new companies other than tax abatements. Cities on the other hand have Economic Development dollars (generated from a portion of their sales tax dollars).We can only offer abatements. Whether an abatement is granted, for how much and for how long depends on the level of jobs to be added to our community- - the income generated by the new jobs created must be large enough to more than offset the property tax revenue we give up in the short term. Our abatement policy should not be influenced by whether we have an “up” or “down” economy; abatements are not intended to be subsidies! The evaluation by Mr. Moore and the decision by your Board are designed to make sure this is the case.