COPPERAS COVE — The city’s first reimbursement to the Five Hills shopping center developer is estimated at $101,000, a figure which is projected to almost double next year but is less than anticipated.
“The city’s expectations (of the center’s performance) are based on the data provided by the developer when the council negotiated and approved the 380 agreement with the developer,” said Ryan Haverlah, city budget director.
“The anticipated rebate (however) is lower than the data provided by the developer.”
In accordance with a 380 agreement the Copperas Cove City Council approved with Austin-based Endeavor Real Estate for the Five Hills shopping center development, the city allocated about $190,000 for the project in the 2014 fiscal year budget.
The figures consist of property and sales tax repayments to the developer, the agreement states.
Endeavor Real Estate is set to receive 25 percent of the property tax the shopping center generates. The developer also will receive 35 percent of the sales tax the center generates during the agreement’s first five years.
The sales tax reimbursements will increase to 40 percent over the next five years, and from 11 to 25 years, the city will reimburse 65 percent of the sales tax revenue.
The agreement will last 25 years or until repayments total $25 million.
“Amounts included in the 2013-2014 proposed budget are property tax rebate (of) $36,849; sales tax rebate (of) $152,659,” Haverlah said.
The increase between this year and the upcoming fiscal years was anticipated as the reimbursement property tax was not paid this year and the development continues to grow, Haverlah said.
“The rebate estimate for FY 2013, $101,284, is lower than anticipated, since it does not include the property tax rebate and the sales were lower than anticipated by the developer,” he said.
“However, both the property values and the taxable sales are projected to increase over time.”
While the reimbursement is slightly lower than projected, the city is still seeing significant benefits from the property.
“The city anticipates $289,383 in sales tax revenues from the Five Hills shopping center through Sept. 20,” Haverlah said. “The amount included in the FY 2014 budget includes sales tax revenue of $324,811 related to the Five Hills shopping center. Property tax revenue of $114,933 is included in the revised FY 2014 budget.”
After the reimbursement is applied, the city is projected to see $188,099 in increased revenues this year and $250,236 in FY 2014, which starts Oct. 1.
The increased revenues generated by the commercial development should help the city pay for future infrastructure projects and capital projects such as city parks and street reconstruction. It should also help improve city services, such as public safety, and possibly lower the property tax rate.
At the current reimbursement estimates, the city doesn’t know if the development will generate enough revenue to reach the repayment cap by the end of the agreement.
“It is unknown whether the full $25 million incentive will be realized within the 25-year period,” Haverlah said.