From
Marty Wieder, Economic Development Director
Title
Resolution granting 380 Incentive Agreement with First Texas Homes granting a partial rebate on use tax revenue
Presenter
Marty Wieder, Economic Development Director
Recommended Action
Approve
Analysis
Doug Duffie, CPA contacted staff on behalf of client First Texas Homes, which is building in the Mira Lagos subdivision. Mr. Duffie noted that First Texas Homes proposes a Chapter 380 Agreement with the City to share his client’s use tax revenues paid for materials used in home construction. This would be similar to how the City has granted situs construction sales tax rebates in association with commercial development projects.
The use tax agreement is based on the volume of materials used and local use taxes paid to build homes, as numerous other Cities in North Texas have approved with First Texas Homes. All of the Agreements have 10-year terms and are based on 80% of a city’s 1% general city use tax. Any portion of a City’s use tax above the 1% general city tax is not involved in the grant, so the City retains 100% of all other sales tax revenues (i.e. Crime Control District, the Sports Corporation, Senior Center, Parks and Street Maintenance).
If approved, First Texas Homes would then apply to the State of Texas for a Texas Direct Payment Permit to generate a use tax in Mira Lagos. And once the permit was approved, First Texas Homes would begin to account for, report and pay taxes directly to the State on a monthly basis, rather than sales taxes to the vendor where they purchased the materials. Therefore, First Texas will incur the monthly accounting and reporting costs. Payments would be made by the State to Grand Prairie every six months. And upon staff confirmation of these amounts, the City will rebate the appropriate percentage with First Texas Homes.
First Texas Homes has an estimated 354 undeveloped lots in Mira Lagos. Mr. Duffie projects that the City of Grand Prairie wi...
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