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County rejects tax abatements for $500M Energy Transfer plants
by Joe Baker
Nov 24, 2012 | 1550 views | 0 0 comments | 10 10 recommendations | email to a friend | print
KARNES CITY – On a split vote, Karnes County Commissioners Court rejected tax abatement agreements proposed by Energy Transfer and its subsidiaries.

The agenda item was considered at the Nov. 13 meeting of Commissioners Court.

During the public comments part of the meeting, Maurice Yarter cautioned the court against doing something illegal in regard to the abatement agreement.

Yarter said the county could not enter into the abatement legally due to several reason, among those are that the county’s tax abatement guidelines expired on Feb. 12, 2010, and the county can not enter into such an agreement without the guidelines being in effect. Yarter said that the fact that no application had been filed with the county clerk’s office, was another reason the county could not legally enter into such an agreement. Yarter also said the agreement would not result in many jobs for local people.

“The bottom line is Karnes County receives no benefit and will lose approximately 1.5 to 2 million dollars per year in tax income, so why is Commissioners Court considering this?” Yarter asked. “This is not in the best interest of the county, and that is your sworn duty.”

Ross Fischer, an attorney representing Energy Transfer, told the court that the application was received by the Karnes County Economic Development office before the guidelines expired in February.

Fischer also said that there is no legal requirement that the application be filed with the county clerk’s office.

“It doesn’t undermine the application,” Fischer said.

The abatement agreements are for a 10-year term, Fischer explained, with a step down declining abatement schedule that starts at 65 percent (reduction in tax payment) in year one and goes down to 25 percent in year ten. The county would receive $600,000 for road maintenance from Energy Transfer, according to the terms of the agreements, Fischer explained.

Another attorney representing Energy Transfer told the court that at least 20 jobs paying an average of $55,000 per year would be created in Karnes County and 40 indirect jobs could be expected related to the construction of the plants. He said the jobs would have a lifespan of an estimated 25 years.

The total cost of the projects was an estimated $500 million, he said.

Commissioner Tracey Schendel asked how much of the construction on the plants is complete.

Construction is 25 percent complete, the representative answered.

“So if we don’t give you a tax abatement, you’re not going to move out?” Schendel asked.

“Energy Transfer seeks partnerships with all of the jurisdictions in which it goes in Texas,” the attorney said. “What it wants from communities is a long term and lasting agreement by which its investment is offset.”

The county would receive at least $500,000 per year in taxes from the plants, after the 10-year agreement expired, he said, and added that a letter of endorsement from Karnes County Economic Development has been attached to the application.

Commissioner Pete Jauer said he is against tax abatements that go beyond 50 percent.

“There will be some benefit to Karnes County, some jobs,” Jauer said. “But there have been a lot of other companies build things here without tax abatements.”

Commissioner Schendel made a motion to disapprove entering into the proposed tax abatement agreements with Energy Transfer.

Commissioner Jauer seconded the motion, which carried with Schendel, Jauer and Commissioner James Rosales voting in favor while Commissioner Carl Hummel and County Judge Barbara Shaw voted against.

The vote was the same for a related agenda item, rejecting this proposed tax abatement agreement, as well.
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