City Council approves tax incentives for hotel, apartment complex

Brian Cuaron

Oct. 4, 2011 at 5:04 a.m.

Mayor Will Armstrong won approval of two tax incentive agreements for a new hotel and apartment complex Tuesday evening.

The Victoria City Council voted on two 380 agreements, agreements that give money to private businesses for the purpose of economic development, City Attorney Thomas Gwosdz said.

Under the agreements, Victoria Affiliates would build a $10 million, 107-room Homewood Suites by Hilton hotel, at 6705 Zac Lentz Parkway, near the Victoria Mall. Victoria Affiliates would receive up to $600,000 back in hotel occupancy taxes in 20 quarterly installments.

Gulf Coast States Investment Corp. would build a 240-room apartment complex near Ben Wilson and Rio Grande streets. The company annually would receive up to $50,000 back in city property taxes for four years, said John Kaminski, director of development services.

Armstrong stressed the need for these agreements, saying that if the city didn't add new hotels, then those visiting Victoria would get in the habit of renting rooms in Austin.

However, going by Armstrong's logic, council members questioned the need to give away tax money to private businesses.

"If it's so profitable to have a hotel, why are we incentivizing?" Councilwoman Denise Rangel asked.

Councilman David Hagan saw no need to give away tax money, saying that the hotel market was so good that Victoria Affiliates would build in the city regardless of the incentive.

Hagan, Rangel and Mayor Pro Tem Paul Polasek said there needed to be standards by which the city would approve 380 agreements.

Polasek said he didn't want to drive away Victoria Affiliates by not approving the agreement. Rangel said she would support the agreement because of the $10 million investment.

Both agreements passed, with Hagan voting no. Councilman Tom Halepaska was absent from the meeting.TAX ABATEMENT TERMINATED

The council also terminated the tax abatement agreement made with Tyco Plastics, now under Berry Plastics. As a result, the company would have to pay the property taxes that were abated in past years under the agreement.

Gwosdz didn't have the amount of back taxes that the company would have to pay.

The agreement called for the plant to employ 290 full-time employees, but Berry Plastics informed the city it fell under that number, Gwosdz said.

Polasek said the plant was suffering because the plant had lost a customer. Councilman Joe Truman didn't want to penalize the company by making it pay back taxes.

Armstrong said not enforcing the agreement would put the city on a slippery slope regarding tax abatements. He noted that Berry Plastics was a large customer.

The council voted to nix the agreement, with Truman voting in opposition.



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