Farmersville Council discusses offering sales tax reimbursements, hotel tax rebate to attract new businesses to town


By Reggie Ellis @Reggie_SGN

FARMERSVILLE – Tax revenue in a small city is hard to come by, especially when businesses are hardly coming by. The City of Farmersville is hoping to change that by offering companies incentives to locate and improve an existing business, or build a new place of business in town.

City Manager Jennifer Gomez said tax reimbursements and rebates are standard for most cities she has worked for but noticed Farmersville did not have a formal policy in place. The city manager said two developers interested in building highway commercial properties along Highway 198 in town had approached her about incentives last fall but she could only find one on the books, and it only pertained to residential developments. It was an unfortunate answer for the city which has been trying to encourage a hotel and a shopping center at the city’s northern boundaries for the last 10 years.

“So I thought I should prepare something and bring it before council,” she said.

The city manager contacted Mario Zamora, with Griswold, LaSalle, Cobb, Dowd & Gin law firm, to present business incentives options to the Farmersville City Council. Zamora presented his report with three options at the council’s Jan. 21 meeting including development impact fee deferments, sales tax reimbursements, and a hotel tax rebate.

“I’m hoping in 2019 we’ll see some more movement toward development,” the city manager said. “We are spreading the word and letting people know we are interested in development. It’s been kind of quiet here.”

Mayor Greg Gomez said the city already offers one of the three incentives presented at the meeting. He said the city allows residential developers to defer development impact fees, which go toward alleviating the impact of new construction on city services, until homes have been sold and a certificate of occupancy has been issued by the building inspector. Zamora suggested the city conduct a development impact fee study to determine that rates are accurate and legally defensible and, more importantly, if they can be increased to create additional revenue for the city.

Mayor Gomez said the city is considering two new incentives for sales tax reimbursement and a hotel tax. In his presentation, Zamora said the city could use a portion of sales tax collected from a business to reimburse the company for improving the property on which it operates. The reimbursement could be dollar for dollar or a percent of each dollar. “In general a sales tax reimbursement program serves to improve the physical appearance of the City, promote improvements of commercial properties, lower building vacancy rates in the City, and create additional jobs,” Zamora writes in his report.

A hotel tax, formally known as a transient occupancy tax (TOT), allows the city to impose a tax on room bookings less than 30 days. The tax can be a flat rate per night or a percentage of room fees charged by the hotel. In order to establish a TOT, the City would have to put the idea and the rate up to a vote. If it were passed on the ballot, Zamora said Farmersville could issue a tax rebate to the hotels as an incentive for new construction within the city limits.

“We are trying to see how we can attract businesses to Farmersville,” Mayor Gomez said. “Both of the options were good and the council agreed it would like to see a mix.”

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