Brenham City Councilmembers and Washington County Commissioners held a joint meeting this (Thursday) afternoon to learn more about different types of property tax exemptions for business inventory.   

Members of the Brenham City Council and
Washington County Commissioners Court meet to
receive information about potential exemptions to
offer to businesses relating to their inventory.

Chief Appraiser Dyann White gave a presentation on freeport and goods in transit exemptions, covering how they work and what their impact would be to the city and county should they decide to begin offering them. 

Freeport exemptions apply to certain goods manufactured in Washington County and shipped out of the state within 175 days.  Goods in transit exemptions are for goods made outside of the county, then shipped and stored locally to be sent out again – either in-state or out of state – within 175 days.  For the goods in transit exemption, the storage facility must not belong to the owner of the goods being shipped.

City Manager Carolyn Miller said the discussion came about because Valmont Industries is expanding and has inquired about the possibility of receiving a freeport exemption. 

According to White, there is just over $115 million in value specific to inventory in Washington County.  Valmont has the highest amount at $31 million, followed by Grocery Supply Company at $24 million, Blue Bell at $18 million and Sealy Mattress Company at $9 million.  White noted that she cannot currently project how much of that inventory value would be exempt from the tax roll because it is not known what percentage of that value is leaving Texas.  She also stated the value amount is what the goods would be appraised at if they were sold to another manufacturer, not their retail value. 

If a business seeks an exemption, they would have to complete an annual application process that documents their total inventory value for the past year and the value of inventory that left the state.  Whatever percentage of inventory shipped out would be eligible for the exemption.  White said an honor system is usually how the reporting of items is policed, as the state does not provide many tools for enforcement.  Commissioner Kirk Hanath said, “If we’re not going to police it, then we shouldn’t do it.”

There is no limit to the amount requested for an exemption, but in White’s experience, most businesses that are approved see 25-30 percent of their inventory value exempted annually.   Exemptions are also granted in perpetuity and would not end.  In addition, if the city and/or county were to move forward with offering the exemptions, they must be granted to all property owners that apply and qualify.  However, inventories cannot qualify for both the freeport and goods in transit exemptions, only one or the other.  According to White, goods in transit exemptions are often limited to entities in coastal counties and are far less common than freeport exemptions.

White said the exemptions would be another way to attract businesses to come to Washington County.  Councilmember Clint Kolby said in his time with the Brenham Economic Development Foundation, there have not been many instances where a business asked about these exemptions, so they are not as effective of a tool as abatements.  Hanath added that abatements are already offered locally and that he believes they have not been monitored as well as they should be. 

The meeting was only for information and discussion, so no action was taken. 

The meeting on exemptions followed a brief council meeting where the body approved an ordinance on its second reading to nominate Blue Bell Creameries as a Texas Enterprise Zone project.  The first reading was performed last week.  The nomination is for Blue Bell to pursue opportunities for state reimbursement as it expands its Brenham plant.

The council then approved an amendment to the state plan of operation related to the Law Enforcement Support Office program.  The agreement authorizes the Brenham Police Department to use the Mine Resistant Ambush Protection (MRAP) armored vehicle currently in its possession.  The amendment updates the agreement to reflect a change in the city’s authorized official for the document, adding Atwood Kenjura to replace Milton Tate.   

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