With debate looming over a possible repeal of the voter-imposed property tax cap, one would think city officials would feel compelled to do everything in their power to responsibly manage taxpayer dollars in attempt to avoid passing the burden onto Houstonians. Instead, the continued abatements and special arrangements with big businesses tell who the city is actually concerned about protecting.
The Bayou City’s latest trade off was with the Valero corporation involving its “Manchester” refinery. The proposal city council passed shortly before Christmas allows 161 acres of Valero’s 190-acre facility (the only facility in Houston city limits) to be de-annexed from the City of Houston and form its own “industrial district.” The purpose of this de-annexation and special district formation is to allow Valero to avoid paying somewhere between $10 – $18 million dollars in taxes over the next 15 years depending on the city’s future tax rate.
In exchange for being allowed to skirt around Houston’s property taxes, Valero guarantees an $800 million expansion. Andy Icken, Houston’s chief development officer says Valero would’ve taken the expansion to Louisiana had council not voted in their favor of the deal, but the company’s actions say otherwise because its management board approved the expansion in early 2014.
The city says that with the property tax cap this deal won’t cost taxpayers anything because they couldn’t have collected these funds anyway. Essentially this means that city hall could reduce property tax on any Houston homeowner, but they chose Valero.
Appeasing Big Business appears to be Houston’s norm.
In 2012, Houston City Council passed the Downtown Living Initiative to promote economic development downtown and to change the district’s ghostlike nature on nights and weekends when offices that inundate the area are closed. The initiative aimed to reduce the property tax burden in the area, but because most units downtown are for rent, only developers received the benefit. Fast-forward two years: downtown is bustling with newly constructed mid and hi-rises in every direction, while homeowners in the rest of the city continue to go without meaningful relief from rising property tax bills.
The standalone NO vote for the property tax abatement was from current tax assessor, then-councilman Mike Sullivan. As he told the Wall Street Journal, “the market needs to decide that without government incentives.”
Supporters of the initiative felt that developers needed to be reassured that investing in this area wouldn’t turn out to be a waste of resources. As we see in major cities throughout not only the country, but the world, downtowns and city centers are magnets that naturally spur economic development without the aid of government initiatives.
While some developers say they needed the tax break to start the projects, that isn’t the case any longer with developments such as 40-story towers with wine rooms and rooftop pools making their home in the heart of Houston. While the average homeowner in Houston could benefit from a property tax break, some developers are using theirs to build lavish lofts.
Reports show the city’s deficit is growing and it seems there is no effort from city hall to curb the growing debt. Meanwhile, City Hall is giving tax waivers to businesses while increasing property tax burdens on residential taxpayers.
Again, a local government is favoring business over its citizens. Houstonians are being priced out of their homes, infrastructure around the city is inadequate, and the city is reaching a crippling deficit. It raises the question, when will officials put the needs of the taxpayers before the wants of business?