LV Property Abatements
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09-17-2007:  Lewisville Property Tax Abatements are not always good.

   Tonight I spoke to the City council about not giving an tax abatement to what I understood to be an office complex and warehouse type business.  The details from the presentation were a little sketchy to me.  The presentation was all about how nice it would be and what the plans were.  I think I heard that the warehouse would employ about 20 people and the Office complex would hold up to 200 people in offices.

    I stated that I am against the 75% off the property tax abatements of 0.46% that are being considered. I think Lewisville has a lot of good things going for it, such as a major highway running through the city, and large companies should invest their money in Lewisville. I think that the City could use these funds  to cover items in the budget that these developments will generate, such as police protection, water service, new roads, etc...  If the City needs the money then the City Council will raise property taxes to provide for these things. I think that it is wrong that citizens have to pay property taxes and these big companies come here and get a tax abatement.  I think that businesses will come to Lewisville and invest their money to be here.  I feel that big companies can afford the money that it takes to pay Lewisville taxes.  The Council should not give this money away.
   I was told that the remarks from the Council seemed kind of rough on me.  I did not think so.  We just disagreed strongly.  The council members stated that I was for abatements last week.  During the meeting, I did not remember being for an abatement for real property (appraised land value).    What I actually supported was not taxing a company for personal property (what it has in storage).  To me these are two entirely different things and that is why I did not relate the two.   To me that's like taxing what is in your pockets.  It does not matter if they store cow manure or gold bars.  Yes, I do not think we need to tax the worth of what is stored in the buildings.  What is the difference if a company had ten thousand dollars is bills or ten thousand dollars of widgets on the floor of the warehouse?  It is still their money no matter what form it is in.

   They also said that any tax break is good for the economy.  I do not think so.  This real property tax break is for the owners of the building who are going to add that to the money they do not have to invest in Lewisville.  Tax breaks might work if you give them to the people who tend to spend their money.

    During the meeting, All the Council stated again that I was for abatements.  They wanted to look at last weeks video.  They reviewed it at the end of the meeting and I was told that it was mistake.  I wonder if that means on my part or theirs - they did not elaborate?  I tried to explain that what was in storage is not the same as land value but I do not think they wanted to discuss it.  I did feel like they wanted to drop it.

09-18-2007:  After the meeting...I wrote to all the members and mentioned why I thought these particular abatements were not good and I gave the following figures.  (note: two weeks later and I have not received a response to my information.) I also stated in my email that some abatements for businesses that are going to return the money in sales taxes are OK.  The Mall is a great example where every dollar sold gives the city 1% (does not include 4B or DCTA) of sales tax income.  To give an abatement to the Mall project is something that I agree with - if they ask for it and it is a deal breaker only.  I am still reluctant to give the money away.  Another example might be to get an existing property redeveloped.  Again, not to just give it away.

    In my quick figures below, I intentionally underestimated the value of the property as 10 Million which is about half of what it is expected to be worth.  Therefore the amount of lost revenue is about double what I used in this example.

       Property value in this Example = 10,000,000.00
       City Property Tax Rate = 0.45679%
       Abatement Discount is 75% of the property tax rate
      75% of City Property Tax (Abatement Discount) = 0.34259%

Therefore, the Estimated Tax Discount in dollars is $34,259.25
The City gets 1.00% of the Sales Tax (this does not include the 0.5% the City gets for 4B usage which is for parks and new buildings, etc...)  Yes, the City gets 1.5% of sales tax but the funs for 4B are supposed to be different.  We will use the 1.0% in this example.

Therefore,  the Amount people would have to spend on taxable items in order for the City to reclaim discount is $3,425,925.00 per year.

This means that each of the estimated 200 employees will have to spend an average of  $17,129.63 per year on taxable sales items in Lewisville.  The abatement was for 5 years and you can add that up.  Keep in mind that at 20 Million value, that this number doubles to each employee spending more than $34K each year on taxable items.

     To me, this is the best case scenario if these were actually 200 new people to Lewisville.  Since I think people spend money where they live, the number of people actually shopping in Lewisville will be much less especially if they do not live here.  If these people already live in Lewisville, then these are not new people to spend new money.  These people would have already been here. The more that you consider actual possibilities, it looks worse and worse.
(update 10-01-2007:  I still have not heard anything back from the City Council on this.  It seems to me that they do not want to address my concerns.)

    Another issue that comes to mind is that these projects may also depress the local building needs.  Will we just have more empty office space and warehouses?  It is hard to say.  They did say that there are not any tenants lined up at this time.

09-20-2007:  Mayor Gene Carey is quoted in the paper and he implies that I stated the City was mismanaged.  I did not.  What I was saying is that I do not think that the City Council has to give the abatements if they are not going to get that money back.  Because of the location and assets of Lewisville, I think the businesses will come anyway.  I admit that he may have been misquoted but I have not heard anything to the contrary.

10-01-2007:  I spoke to the City Council meeting today for the record.  I stated that I read the Mayor's remark and I suggested that he may have been misquoted.  I stated directly to the City Manager that I thought he was doing a great job managing the City.  I also stated that after the meeting on 09-17-2007 that it was mentioned that I was supporting property tax abatements.  I stated that the land and structures are what I consider for property taxes, not the items that are stored in the building - which can leave at anytime.  It is like paying more because you wear a nicer watch on your wrist.  I stated that I consider these subjects as different.   I also asked if they got my email and figures.  I got a few nods but no comments to my figures.  They seem to want to drop the subject.


In 2007, I learned that retail and commercial locations (store fronts, warehouses, office buildings, etc...) had to pay personal property taxes.  I never thought that this would ever apply to a person's private residence.  Well, now I know - It does.
     I would venture a guess that most people who have a small business and work from their home do not know this either, so let me tell you what I learned this week. A person will have to pay personal property taxes on their home office or any personal property if they use that personal property to make money. Period. These items can include but not limited to: Office furniture (desk, table, lamp, etc…), office equipment (phone, fax, printer, PC, calculator, etc...), tools of your trade (blow torches, hammers, ladders, etc...), and inventory.   Here are just a few areas that you might not have thought about … Mary Kay, Avon, Handy Man stuff, Mow Lawns, Massage Therapy, a subcontractor, bringing work home from your business or work. Yes, work. Technically speaking you would be doing something to make a profit.

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