A Chapter 380 agreement is allowed by the state’s local government code and lets cities contract with private business.
Victor Garza, Refugio County Community Development Foundation executive director, said he is advising to pursue an option to contract with those who are building or planning to build multifamily housing in Refugio.
He said the first order of action is a resolution from the council creating a Multifamily Housing Incentive Program.
In one comparative example, he said a standard tax abatement would be allowed with at least a $150,000 investment. But that would be it, and the city would get only $5,464.52 in revenue over the period of the abatement.
However, with a 380 agreement, the business first would have to agree to voluntary annexation.
This means about a $6.5 million investment with control over design, layout and the number of units the private investor builds. And a three-year time limit would be placed on the project.
The cost to the city would be $1,565 over the 10-year lifetime of the agreement.
“It is a tool, and it can be tailored,” Garza said.
Garza said the housing shortage is widespread, and multifamily housing is a quick and easy way to provide affordable housing.
Garza used himself as an example of a young professional who found it very hard to find housing in Refugio.
“We need to be able to compete with the larger markets – Corpus Christi and Victoria. The high labor cost is a challenge,” he said.
With a 380 agreement, revenue can be raised based on what a developer does.
“The less a developer does, the less they get back (under the agreement),” he said.
So while both parties have agreed to a 380, the business pays property taxes because it agreed to annexation. However, at the start of each calendar year, the business can approach the city council to be reimbursed for property taxes paid the previous year.
If a developer meets the terms of the 380 agreement (flexible and set by the city council), then a portion of the taxes (set by council) is reimbursed.
However, if the developer has not met the terms, the council can deny reimbursement.
Garza suggested a 380 option that would cost the city zero. The cost would be $111,800 and the revenue would be $111,800. But the incentive would still be there for a business to ask for annexation.
“The 380 is a living, breathing document. You can add to it and be more specific. After 10 years, the city is at the profit-making point,” Garza said.
Garza mentioned developments in the city’s extra territorial jurisdiction – property not in the city limits. He said these developers want to build and will do it regardless of the 380.
“Service would have to be provided, but the city would not get money from property taxes,” he said.
“With the 380, the development would be built to standards. The demand is there and 380s are the best ways with little up-front costs,” he said.
After a closed session, the council took no action on the resolution, saying it wanted to tailor a 380.
“We like what we heard and want to pursue it further,” said Councilwoman Karen Watts.
A workshop was set for Tuesday, June 3, immediately following a special meeting, to work on a 380 agreement.