County considers shift on tax break strategy
Montgomery County commissioners approved tax abatement requirements for another two years but the county is trending away from the program as it shifts agreements that are focused on residential projects.
Tax Assessor-Collector Tammy McRae said the county is required by state law to adopt its tax abatement program policies every two years.
A tax abatement is a local agreement between a taxpayer and a taxing entity that exempts all or part of the increase in the value of the real property and/or tangible personal property from taxation for a period not to exceed 10 years, according to the Texas Comptroller’s website.
Tax abatements are only available for commercial development and offer an incentive for large companies to develop in Montgomery County by not paying taxes for a designated amount of years.
The court has discussed the need for tax abatements in the past with some commissioners in favor of no longer approving them. During an October meeting, County Judge Mark Keough said the county needed to be tough with tax abatement agreements because the county is an attractive location for many companies.
Instead, they want to focus on residential development, working with what is called an 381 Agreement. The agreement allows counties to provide incentives specifically for encouraging residential development, to build in their jurisdictions.
The agreement allows to county to develop a program to make loans and grants of public money to promote state or local economic development and to stimulate, encourage and develop business locations and commercial activity in the county.
County Attorney B.D. Griffin said the county has 10 such agreements. As far as tax abatements, the county has 14 active, most with manufacturing companies that are in the Conroe Park North Industrial Park and in The Woodlands, McRae said.
Commissioners on Jan. 24 made no changes to the existing tax abatement program, which requires a $10 million minimum capital investment by a company as well as a minimum of 10 employees to work on site.
“Employees factor into the type of abatement,” said County Attorney B.D. Griffin. “We found a few years ago as technology increases you can manufacture more with less employees and employee counts were going down.”
Precinct 3 Commissioner James Noack, who has been consistently vocal in his opposition to tax abatements, asked Griffin if the policies could be changed to have more “teeth.”
“I don’t like when we acquiesce and accept their default or give them the opportunity to cure,” Noack said. “We have no way of saying ‘we are canceling this agreement, we’re done.’”