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Caterpillar tax agreement could see changes

By Melissa Crowe
June 17, 2012 at 1:17 a.m.
Updated June 18, 2012 at 1:18 a.m.

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The council is also expected to consider:

A resolution capping the city's spending $46,500 for the city's annual audit

A resolution awarding a bid for Phase 3 of the Downtown Water and Sanitary Sewer Replacement Project to Palacios Marine & Industrial Coatings, Inc. for $2.08 million

A resolution for temporary labor from Labor Ready, Goodwin Personnel Services, APS and Manpower not to exceed $150,000 in the general fund and $67,000 in the solid waste fund

A resolution to spend no more than $76,054 for legal representation from Booth, Ahrens & Werkenthin in the sewage treatment plant's contested case hearing.

If You Go

WHAT: Victoria City Council meeting

WHEN: 5 p.m. Tuesday

WHERE: 107 W. Juan Linn St.

Tweet your questions to @melcrowe. She will be sending live updates from the meeting.

In exchange for adding 10 full-time jobs and property improvements, Caterpillar Inc. wants two phases of its tax abatement agreement amended.

The Victoria City Council will have its first vote Tuesday on two ordinances that would modify the company's agreement with the city.

The first change abates 100 percent of taxes on total value of improvements to the property for 10 years, ending Dec. 31, 2022.

The second amendment abates a "shot blast" process and a rail yard at the facility.

Economic Development Corporation President Dale Fowler said the first change defines the original tax abatement.

The change will make it easier for the appraisal district to identify which building is abated for which phase.

The second change, which affects Phase II, allows Caterpillar to receive abatements to expand its facilities in exchange for 10 jobs, Fowler said.

That abatement does not go into effect until 2014, he said.

He said the two changes were minor.

To provide tax abatement to the expansion, Caterpillar has two options: It can submit a new application for tax abatement of the expansion alone, or it could amend the existing Phase II agreement. A new application would require Caterpillar to commit at least an additional $500,000 investment and would allow the creation of a new 10-year abatement. Amending the existing agreement would not require the added investment and would cap the abatement to the currently-existing 10-year term, according to information from the city.

This amendment would allow Caterpillar to add the new expansion to its existing 10-year tax abatement in exchange for 10 additional full-time jobs.

The company agrees to hire at least 575 full-time employees before Dec. 31, 2016, and maintain 420 full-time employees through the 10-year abatement.

Caterpillar is in full compliance with its tax abatement agreements, according to information from the city.

Mayor Will Armstrong said amending the tax abatement is part of their agreement with Caterpillar.

"The whole project is deserving of the tax abatement agreement, so we will be modifying the tax abatement agreement as they add square footage and value," Armstrong said.

He said he anticipates more announcements and amendments to the abatement in the future.

"I think any town in the United States would have made that agreement," Armstrong said. "My thought is: Bring it on. Every one of those announcements brings new jobs."



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