Victoria City Council accepts tax incentive

Melissa Crowe By Melissa Crowe

March 6, 2012 at 7:04 p.m.
Updated March 6, 2012 at 9:07 p.m.

The Victoria City Council wants to give a tax incentive to a new company by declaring its recently purchased 30 acres a reinvestment zone.

The resolution to accept the tax incentive application passed in a 5-1 vote Tuesday with Councilman Gabriel Soliz voting against the idea.

The agreement with Pennsylvania-based Keen Transport Inc. is the first Caterpillar-related project in the city.

Victoria Economic Development Corp. President Dale Fowler said the tax abatement is a "reasonable request."

It will be several weeks before the Council votes to grant a seven-year, phased-in tax abatement to Keen Transport. First, an impact analysis must be completed, Fowler said.

Carroll Saxe, a representative with Keen, said the property was purchased Feb. 24. The tax abatement application was submitted Feb. 1.

"We're moving right along," Saxe said. "We are excited about coming down to Victoria."

Keen Transport and Caterpillar have worked together for more than 40 years in Arkansas, Georgia, Illinois, North Carolina and soon-to-be Texas.

Keen's property, former agriculture-exempt land at the intersection of Lone Tree Road and Zac Lentz Parkway, will be developed to provide a new storage and distribution facility for the neighboring Caterpillar excavator plant.

Soliz said the company does not need an incentive because the land already has been purchased and the contract signed.

"We're on a sugar-high from completing the abatement with Caterpillar," Soliz said. "That was a necessity to attract the other variables that go with it ... They (Keen) don't need to be incentivized because Caterpillar is already here."

He said he wanted to focus on creating returns on investment.

Mayor Will Armstrong said he has "no qualms whatsoever" about supporting and creating incentives for new ventures in Victoria.

"What we're looking for are the jobs," Armstrong said. "We're creating value in our community by these jobs."

Tax abatements grant full or partial exemption of ad valorem taxes - a tax levied on the difference between a commodity's price before taxes and its cost of production, of certain real property in a reinvestment zone. The maximum abatement depends on the taxable investment.

Keen estimates its total value eligible for abatement of $14.65 million, according to its application.

A taxable investment between $8 million and $15.99 million starts at 90 percent its first year and decreases annually for eight years, Fowler said.

According to the tax abatement application, Keen estimates generating $132 million in corporate annual sales and $8 million in local annual sales.

Eligible property for the tax incentive may be building values, structures, fixed machinery and equipment, site improvements, plus office space and related fixed improvements to the operation and administration of the facility. However, inventories, supplies, tools, furnishings, vehicles, hotel accommodation and similar expenditures are ineligible property.

Councilman Tom Halepaska was absent.



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