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UPS is among the companies that have received property tax abatements from City Hall in recent years for investing and creating jobs in Houston.<\/p>\n
Jason Fochtman\/Staff photographer<\/p>\n
Companies hoping to receive tax breaks in Houston may soon be required to meet more stringent guidelines, including giving their workers higher wages and benefits.<\/p>\n
The overhaul of the city\u2019s property tax abatement rules comes as City Council has greenlit several new agreements in recent years, including an $11 million deal approved last month for a new natural gas power plant developed by NRG Energy<\/a>. The new rules, released by the city last week, also would make it easier for retail developments to qualify for the tax incentives.<\/p>\n READ MORE: Houston City Council waives its own rules to give NRG an $11M tax break for a new power plant<\/a><\/p>\n Article continues below this ad<\/p>\n The slate of changes, many proposed by Council Member Alejandra Salinas and backed by labor groups, is expected to reach the city council for consideration next month. The proposals would boost insurance, wages and apprenticeship requirements for companies that are granted abatements. Companies with a significant history of workers\u2019 rights violations would be barred from the program.\u00a0<\/p>\n Under the proposed rules, companies seeking new tax breaks would need to:<\/p>\n Ensure 15% of hours are worked by apprentices The rules also would make companies and subcontractors with a history of workplace safety violations ineligible and would add a new type of abatement designed to increase density in low-income areas.\u00a0<\/p>\n Dallas, San Antonio and Harris County\u2019s tax break rules all have minimum wage and health insurance, but Houston\u2019s current code does not, Salinas said.<\/p>\n \u201cWe all agree that tax abatements can be an important tool,\u201d Salinas said at an August council meeting. \u201cBut for over a decade, labor groups have been demanding that the city hold these companies to account and set specific requirements they must meet if they are going to benefit from a lack of tax payments.\u201d\u00a0<\/p>\n Article continues below this ad<\/p>\n Companies also would have to ensure 15% of construction hours are performed by apprentices, and all construction workers must be paid competitively for their trades.\u00a0<\/p>\n Houston has granted these deals, known as Chapter 312 abatements, to a wide range of companies in the hopes of spurring economic development. Companies get discounts on their property taxes \u2013 typically no more than a 90% reduction \u2013 for up to ten years in exchange for investing in new facilities or upgrades and creating jobs.\u00a0<\/p>\n READ MORE: Controller\u2019s audit raises questions about Houston economic development program<\/a><\/p>\n These abatements have typically gone to large warehouse facilities for United Parcel Service and Kroger as well as mixed-use developments and office buildings.\u00a0<\/p>\n The city\u2019s economic development office also has proposed a new type of abatement in response to council members\u2019 push for more retail development in high-poverty areas.\u00a0<\/p>\n Article continues below this ad<\/p>\n Such projects would not be required to create new jobs. The city says the developers they want to target typically do not hire permanent workers themselves, but that retail tenants in the new facilities would employ workers.\u00a0<\/p>\n \u201cThere are some instances where a project may not necessarily be an industry that we are recruiting for,\u201d said economic development director Gwendolyn Tillotson-Bell. \u201cBut we know that in some communities that are food deserts, for example, a grocery store is critically important.\u201d\u00a0<\/p>\n Applications for this tax break also would come with a new requirement to obtain a letter of support from a local Super Neighborhood.<\/p>\n SUPER NEIGHBORHOODS: These Houston groups are supposed to give residents a direct line to City Hall. Nearly half are inactive.<\/a><\/p>\n Any requirement in the tax abatement code can be set aside if the council agrees to waive it. The NRG deal, for example, included a provision waiving rules that would otherwise have prohibited the abatement from supporting an energy generation project.\u00a0<\/p>\n Article continues below this ad<\/p>\n Still, the property tax abatement program has more rules than another economic development tool Houston historically has more frequently used. It lets cities lend or grant public funds to private companies but has no job creation rules or penalties for noncompliance<\/a>.<\/p>\n A 2018 audit by the controller\u2019s office also critiqued the city\u2019s oversight of that program<\/a>, noting that the city ran the program without formal procedures or, in some cases, documentation of whether companies had satisfied their agreements before receiving the tax breaks.<\/p>\n
\nPay construction workers competitive wages based on federal guidelines
\nPay permanent workers at least $18 an hour
\nOffer health insurance for employees and dependents
\nSubmit more data to auditors than is now required
\nSubmit a statement outlining why the project needs an abatement to move forward<\/p>\n