Property Tax Abatements- A Deal or Not?

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 a company at the expense of the rest of us. An example is a recent email 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 try to give you my perspective as I do not think the Board is “throwing your money away.” On the contrary, I think these abatements are driven by the competitive market and will in fact generate, both in the short and long term, increased property tax and sales tax revenue which will help keep our taxes at a reasonable level. 

On December 17, 2012, Montgomery County approved a tax abatement agreement with Chicago Bridge & Iron (CB&I) for the property located at 2103 Research Forest Drive. CB&I is planning a major expansion to their campus, including the construction of a 150,000 square foot office building and a parking garage with a total cost of approximately $35 million. The facility will accommodate at least 200 FTEs and is anticipated for completion by December 31, 2014. This decision does not include any abatement on their existing property. At today’s Township property tax rate, I believe the new abatement will be about $131,000/year starting in 2015.  

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, I wanted to make sure that we were not just “blindly” following the County’s lead and 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 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. 

In total, I believe the level of Township property tax abatements is very low. CBI and other abatements granted this year, such as Anadarko, will not affect our 2013 property tax revenue, only in future years. For 2103, we are abating properties valued at about $52.5 million out of a total valuation on these properties of $82.6 Million (the total value of a property is seldom abated). The current abatements expire between 2013 and 2017. At our current tax rate of $.3173/$100, the value of the 2013 abatements is $166,715. To me this does not seem unreasonable given our total 2013 Property Tax Revenue is budgeted at $41.5 million on an assessed value of $13.9 billion. This means our 2013 abatements are only .4% of our total property tax revenue. 

It 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). For example, in the case of Anadarko, I understand that their new Township building was approved by only 1 vote of their Board. Houston was offering them EDC cash incentives as well as tax abatements. We can only offer abatements. Whether abatement is granted and for how much 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. The evaluation by Mr. Moore is designed to make sure this is the case.