Tuloso-Midway Independent School District trustees took their first step towards greater economic development by directing school administrators to begin researching the benefits of a tax abatement agreement with a plastics manufacturer looking to relocate to the area.
M&G Group, an international polyethylene terephthalate resin manufacture, has decided to locate their third North American plant in Corpus Christi, specifically, within the taxing boundaries of the TMISD. TMISD Interim Superintendent Sue Nelson said this is a $900 million opportunity for the district, as the company is expected to bring in more than 3,000 construction jobs in the first 30 months, with an additional 250 semi white collar, professional jobs, with salaries in the $70,000 range and above.
PET resin is used in the manufacture of plastic containers such as drink bottles and other food and product packaging materials. In a press release issued by the Corpus Christi Regional Economic Development Corporation, M&G Polymers Business Unit CEO Marco Ghisolfi said the decision to locate to the northwest Corpus Christi area was based on the close proximity to six refineries, as well as a paraxylene production facility in the area.
Access to nearby highway, deep-water and rail corridors, including three Class 1 railroads, also played a factor.
Nelson said she has been on the phone with M&G officials over the last few days. She said the district was willing to consider a Chapter 313 tax credit for the company. Nelson said at this point, the district would enter into a research and negotiation phase with M&G to see what the costs would be associated with pursuing a Chapter 313 tax credit.
“We can work with the company, up front, to absorb the costs of the Chapter 313 process, which is extensive,” Nelson said.
She explained that over the last 10 years, laws have become more restrictive when it comes to the use of tax abatement agreements, such as Chapter 313s. Unlike other forms of general tax abatement between governmental entities and businesses, which is a practice that occurs to attract businesses to the jurisdiction of a taxing entity, a Chapter 313 limits the period of tax abatement to eight years, TMISD Buisness Manager Philip Carroll said during the board meeting.
“Also, you are forgoing taxes on your maintenance and operation revenue during that time, but not on the interest in sinking rate. You still collect on the (debt and service),” Carroll said.
He pointed out that many of the school districts in the area, which have large wind turbines within their jurisdictions, utilize a Chapter 313 tax structure, since the companies are involved in “green” business. That is one of the requirements for this particular abatement structure.
“It has to be a clean company to do this type of agreement,” Nelson said.
M&G has already initiated the process by sending an application to pursue the tax abatement to the state comptroller’s office. Nelson said there is still a lot to do, as far as researching the implementation of a Chapter 313 agreement and analyzing the total economic impact a company like M&G would bring to the area. The board voted 7-0 for Nelson to pursue research and negotiations for costs with M&G, though a final vote would be taken prior to the approval of a Chapter 313 agreement.
The board members also held a public hearing on the proposed TMISD budget for 2011-12. Preliminary property valuations for the district total $1.6 billion, Carroll said, which is $146 million more in property valuations than what the school district saw in certified values last year.
The proposed budget as presented was created using the same tax rate as last year, $1.17 per $100 of property valuation for maintenance and operations, and $0.1622 per $100 of valuation for the interest in sinking, which is used to pay the district’s debt service.
Though the district will lose more than $800,000 due to state revenue cuts and the conclusion of federal funding programs, the district is able this year to hold on to a larger portion of taxes from property valuations due to new taxing criteria, which will help offset the cuts, Carroll said.
The proposed budget has total general fund revenue of $27,677,038 and expenditures of $25,902,936.
Carroll on Monday said the district was still unsure what the effective tax rate for the district would be.