An area wind farm has expressed interest in a 10-year agreement that would reduce the taxes it would owe to Canyon Independent School District, Assistant Superintendent Randy McDowell said during the district’s board meeting Monday evening.
The board prepared for the anticipated application for a tax limitation agreement by approving an increased application fee and other policy changes.
McDowell declined to name the company the school district has been speaking with, citing rules that allow talks to be confidential until an application is filed.
Tax limitation agreements are similar to tax abatements, which school districts can’t offer to businesses, and they only affect maintenance and operations taxes, leaving the debt service portion of tax revenue unchanged, McDowell said.
“The reason it’s not real harmful for schools to do that is because, remember in state funding, if our values are down, our state funding is up and vice-versa, so it all works out,” he said.
CISD dropped its tax rate this year by 1.3 cents for a total rate of $1.215 per $100 of valuation. Maintenance and operation makes up $1.04 of that rate, Globe-News files show.
Under a tax limitation agreement, Canyon ISD would place a cap on a business’ valuation to reduce taxes owed on the maintenance and operations side, McDowell said. Advocates of deals like these have said their aim is to create job growth, and the state requires school districts to study impact to its finances, while encouraging them to study a project’s economic impact.
Those studies require school districts to bring in consultants, and the board hired Underwood Law Firm to do the job for $60,000.
That cost led to the board increasing its application fee by $10,000 to $75,000, and the board’s policy states that the fee will go toward hiring consultants as they undertake economic and school finance impact studies.
The process of receiving an application and developing an agreement, which a board can only approve following a public hearing, could take about five months, McDowell said.
Before board approval, applications must be reviewed by a state comptroller, and the Texas Education Agency reviews the finance end, he said.