City council approves tax abatement ordinance

By Rosanne Fohn

Anvil Herald Correspondent

Hondo City Council passed a tax abatement ordinance Monday night. The new rules replace an expired policy put in place in 2017, which automatically expired at the end of two years, according to state law. The 2026 guidelines will expire in 2028.

The ordinance does not bind the city to offer abatements, but provides guidance to begin discussions with a business or property owner who wants to bring in a new business, or expand or modernize current facilities within the city and is requesting an agreement to pay less in taxes. 

Tax abatements are a full or partial exemption from paying ad valorem taxes on eligible properties in a tax increment reinvestment zone. The city will designate the reinvestment zone at a future meeting.

The abatements benefit the city by encouraging and supporting economic investment and job growth. The abatements are only eligible on the value of improvements to the fair market value of the property. The property owner would need to pay the fair market value assessed on Jan. 1 of the year before the abatement request.

In addition to the percentage-based tax abatement schedule shown in the chart, the new ordinance also established payment in lieu of taxes (PILOT), a negotiated, lower annual fee paid directly to the local government instead. 

To request a PILOT or percentage-based tax abatement, a business or property owner should contact the city manager or visit the city’s website, hondo-tx.org, where information will be available soon.

After a feasibility review by the city manager and economic development executive director, the application may be presented to the Hondo City Council for consideration.

In other business, council:

• Awarded a five-year agricultural lease for parcels of land at the Hondo Regional Airport to William Lamon Farms, for a total of $564,816.

• Authorized the Hondo police chief to enter into a five-year memorandum of understanding with the Drug Enforcement Administration Task Force Officer Program. The cooperative agreement with a variety of police agencies will help disrupt illicit drug trafficking, investigate and report intelligence and conduct undercover operations in order to reduce crime in Central and South Texas. No financial obligation was involved.

• Approved the purchase of two Ford F-150 trucks for the Hondo Police Department from Cecil Atkission Ford for $90,000, which was a budgeted item. The trucks will replace two current trucks, one of which will move to another city department.

• Ratified execution of a license agreement with Shift-S3ctor LLC for an auto race at the airport March 12-14. The race has been held annually at the airport for a number of years each spring.

Capital Investment Full-Time Maximum Maximum

(New Taxable Value) Jobs Created Abatement Term

$1 million - $3 million 10-15 40% 4 years

$3 million - $5 million 16-20 50% 5 years

$5 million - $10 million 21-25 60% 6 years

$10 million + 26 + 70% Up to 7 yrs