01-09-17 Meeting of the La Porte Development Corporation Board

Browse Search

December 21, 2016 Honorable Larry Taylor 6117 Broadway, Suite 122 Pearland TX 77581 wĻʹ tğƭƭğŭĻ ƚŅ \[ĻŭźƭƌğƷźƚƓ Dear Representative Taylor: The City of La Porte seeks passage of legislation that would correct a flaw in the Texas Local Government Code. A municipality that is located in a county with a population of 500,000 or more is authorized to create a Type B economic development corporation in accordance with Chapter 505 of the Texas Local Government Code. If approved by voters, the municipality may adopt a sales and use tax for the benefit of the corporation. This additional tax may be used only for the type of projects that are specified within Chapter 505. The La Porte Development Corporation was incorporated in 1999 after voters authorized a half-cent sales tax to promote new or expanded business enterprises, including roads and related infrastructure. Funds can also be used for public parks, museums, and facilities. Since its inception, the La Porte Development Corporation has completed a variety of projects, ranging from quality of life improvements like construction of regional baseball complex to infrastructure projects like additional downtown parking lots and Canada Road street construction to development incentives that facilitated both new business recruitment and business expansion/retention. The Corporation has entered into development agreements with businesses for a total of almost $2.2 million in incentives, which facilitated over $273 million in capital investment, 465 additional jobs, and an increase in taxable sales of at least $6.5 million over the life of the agreements. Section 505.258 of the Local Government Code states that a sales and use tax for economic development purposes may corporation cannot collect its only source of revenue, it has no reason to exist. While it was not likely intended by the Legislature, this language incentivizes the issuance of debt even if it is not needed to fund projects, which is the case for the La Porte Development Corporation. The projects identified above were all funded without the use of Corporation- issued debt. While corporations are not required to issue debt, those that do must continue to do so just to maintain their existence. The City of La Porte requests legislation that modifies Section 505.258 to allow a Type B corporation to continue to collect sales taxes so long as bonds, projects, and other obligations exist for the corporation. The La Porte Economic Development Corporation, for example, receives almost $2.5 million per year in sales tax revenue that could cash fund many important projects that will spur the local economy. Without a change to the current code, however, the La Porte Development Corporation would cease to exist after the effective date of this harmful legislation, as it currently carries no Corporation-issued debt. I have attached for your reference the specific changes that should be made to Section 505.258 . Thank you very much for your consideration.