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County plays hardball on Enron building

When last we met, the County Commissioner’s Court was wreaking havoc on the proposed sale of the Enron building to ChevronTexaco by playing coy about a tax abatement for improvements. We see today that they haven’t changed their tune.

Harris County commissioners didn’t discuss a policy on tax incentives at a Tuesday meeting, signaling ChevronTexaco may not get the tax break it wants in exchange for buying the newer of the Enron buildings.

The commission was expected to discuss its policy on granting tax breaks to businesses and perhaps whether to give the California-based company a break, just as the city did. But it put off any discussion after its staff recommended not giving the tax break.

“We’re going to take that to mean they are not going to address it. So with something like that, we’re left in limbo,” ChevronTexaco spokesman Mickey Driver said. “We have to move ahead, so right now we’re looking at our options.”

Moving forward with buying the 40-story building could mean renegotiating closing requirements for the deal, said Driver, who would not say what any new negotiations would involve.

[…]

Houston City Council has agreed to give ChevronTexaco a tax break on $64 million in building improvements and furnishings, reducing the company’s payments to the city by $350,000 a year for 10 years.

The company would still have to pay full taxes on the building’s current assessed value of $79.3 million, which would bring the city $520,000 a year.

“I am confident that our community will do what it takes to bring more jobs to Houston. I and other civic leaders should get this deal done,” Mayor Bill White said through a spokesman.

Driver praised the city’s efforts to facilitate the deal but said the county was not so accommodating.

“We’re not mad at the county or the commissioners. We just found it very, very difficult to work with county staff,” Driver said, adding that “to this minute we don’t understand what we did wrong.”

David Turkel, the county’s director of community and economic development, said his office had again reviewed ChevronTexaco’s application and still is recommending against granting the oil giant a tax break.

[…]

Commissioners didn’t actually consider ChevronTexaco’s request for a tax incentive Tuesday.

Such a request would make it to the court’s agenda only if Turkel’s staff recommends approval.

The commissioners did direct Turkel to review the county’s criteria and policies on tax breaks, with particular attention to the way requests are coordinated with other local governments.

During the discussion of the guidelines, Commissioner Steve Radack suggested that Harris County consider buying the downtown tower if ChevronTexaco backed out.

It was clearly intended to send a message to ChevronTexaco that Radack, for one, did not care if the company pulled out of the real estate deal.

You know, I’m still not sure if the Commissioner’s Court is sticking it to the new Mayor, or if he genuinely screwed up by jumping the gun and/or not following known protocol correctly. I did a search through the Chron archives “Harris County Commissioners” and either “tax break” or “tax abatement”, and found two examples of tax abatement denials, one in 1997 when a chemical plant was turned down (at least at the time) for being a polluter, and once in 1996 when Albertson’s grocery stores was rejected for being unfair to existing grocers – the full story is beneath the More link for those who are curious.

It would seem, therefore, that denying such a request is unusual; at least, it would seem unusual enough to be newsworthy. What I don’t know is if this type of request is itself unusual. It’s not the kind of abatement request that was created in 1987 to lure businesses – it appears to be more discretionary. Looking around more, it appears that any taxing agency can grant such a requst, then other taxing agencies who have a piece of the action have 90 days to decide whether or not to go along.

Anyway, for what it’s worth, my gut says the following:

1. The denial of a tax abatement requested in this fashion is uncommon, though perhaps not as a percentage of the request total.

2. The Commissioner’s Court is playing hardball, but it’s more of a turf thing than a partisan thing, since neither El Franco Lee nor Sylvia Garcia seem particularly upset.

3. Mayor White probably screwed up, though it doesn’t appear to be terribly damaging to him so far and it may have been more in reading the Court than in dotting I’s and crossing T’s. I’ll bet he never makes this mistake again.

Probably more than you wanted to know. Sorry about that. Got a bit carried away.


HOUSTON CHRONICLE
Date: WED 03/01/95
Section: A
Page: 16
Edition: 2 STAR

County court votes down tax deal for Albertson’s

By JOE STINEBAKER
Staff

Harris County Commissioners Court voted 3 -2 Tuesday afternoon to deny a $45 million tax abatement to Albertson’s Inc., signaling its disenchantment with the tax -abatement program.

County Judge Robert Eckels said after the vote that the issue shows the need for a review of the policy for granting tax concessions to businesses considering moving here.

“I think we probably will change our criteria,” he said, adding that commissioners will begin discussing tightening up the program by mid-year.

Albertson’s, a large grocery chain based in Idaho, had asked that the county for a tax abatement on an 800,000-square-foot distribution center planned at the Katy Freeway and Grand Parkway. Company officials said the center would employ 350 people by the end of the century.

Robert K. Banks, Albertson’s vice president for real estate, told commissioners the abatement would be a “significant factor” in Albertson’s decision on whether to build the distribution center in Harris County . Company officials have said that, without an abatement , they may consider building in some other South Texas county . And regardless of the decision, he said, Albertson’s planned to build as many as a dozen stores in the Harris County area.

But at least a dozen opponents, led by grocery chains already doing business in the area, told commissioners the abatement would be an unfair advantage in a saturated, highly competitive market.

Commissioners El Franco Lee, Jim Fonteno and Steve Radack voted against granting the abatement ; Eckels and Commissioner Jerry Eversole voted for it.

Albertson’s officials refused comment after Tuesday’s vote on whether the abatement rejection would alter plans to build the center in Harris County .

If the court tightens the criteria, it will be heading in the opposite direction from the City of Houston, where Mayor Bob Lanier has proposed an easing of abatement criteria.

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One Comment

  1. David Siegel says:

    Thanks for all this info. This is a really fascinating lab study that you don’t often get: company insists it needs abatement; company doesn’t get abatement; company makes investment anyway. Just what we always suspected.