Caterpillar offered $5.5 million-plus incentive package

Jim Dugan, chief corporate spokesman for Caterpillar, discusses the company's plans to build a manufacturing plant in Victoria.
  • TimelineAug. 12: Caterpillar announces plans to build in Victoria

    September: Caterpillar plans to break ground

    Mid-2012: The plant is scheduled to begin production.

    2014: Plans call for it to be fully operational.

Caterpillar will get a $5.5 million incentive package to locate in Victoria, not including a property tax abatement not yet approved.

In exchange for the package, the company plans to invest $120 million to $150 million to build a manufacturing plant that will create 500 jobs when it's fully operational.

"I'm thinking this is a good investment in our community," said Dale Fowler with the Victoria Economic Development Corp.

The city council is scheduled to approve a 10-year, 100-percent property tax abatement on city taxes. The commissioners court will consider the same deal for county taxes after the council acts.

That's the maximum abatement allowed by the state.

Mayor Will Armstrong said the tax abatement is an incentive any community would have been willing to offer in exchange for the size investment Caterpillar plans to make.

The abatement applies only to the improvements the company plans to make, which include a 600,000-square-foot building to manufacture hydraulic excavators. It does not apply to the property on which the plant will be built.

The Victoria Sales Tax Development Corp. owns the 320-acre Lone Tree Business Park where Caterpillar plans to build. The sales tax corporation will give the property to Caterpillar, putting it back on the tax rolls.

The sales tax board and the city also plan to provide a total of $2 million for such site improvements as roads, wells and power improvements, Fowler said.

County Commissioner Kevin Janak said the tax abatement is a good investment in return for a project that will bring more people to the county, result in more houses being built and will improve retail sales. It takes those things to build the tax base, he said.

"In the economic times we're in, this is a big, big boost for Victoria County now and in the future," Janak said. "With this project starting as soon as it is, it's providing an immediate boon to the community."

Janak also said he thinks Caterpillar's investment will lead to more large companies moving to the area.

Council Member Gabriel Soliz said he thinks the incentive package is what it took to help close the deal. "I'm hoping and praying they will be a good corporate citizen and hire locally as far as contractors and securing supplies."

Lewis Neitsch, who heads the sales tax board, said the $1 million that group will provide for site improvements is money well spent.

"I think it's going to be good for the community," he said. "I don't think there is going to be anybody in Victoria that's not going to benefit."

The Victoria Economic Development Corp. has been criticized for not dividing up the business park to make it available to smaller businesses and get development going more quickly.

Mayor Pro Tem Paul Polasek said he hopes people will now see that would have been a mistake.

"Patience pays off," he said. "It has been a long time in coming, but we waited until we could get this one single client."

Russell Pruitt, with Citizens for Responsible Government, a local watchdog group, said he doesn't have a problem with the incentive package.

"I think that's what it's all about," he said. "This is great news."

He said the group has generally opposed tax abatements in the past, but because they brought in competition for local businesses or were awarded inconsistently.