SEDCO approves $9.19M budget amid potential TI project

Michael Hutchins
Herald Democrat
The Sherman Economic Development Corp. approved a $9.19 million budget Tuesday. However, officials said many unknowns remain for development next year.

The Sherman City Council and Sherman Economic Development Corp. brought the budget season to a close Tuesday when the entities approved a $9.19 million budget for the city's economic development arm. The new budget comes at a time of some uncertainty for what the next year has in store for Sherman after unprecedented sales tax revenue increases, possible major incentives and the looming potential for major investment by Texas Instruments within the next year.

The new budget, which was approved in a joint session of the  SEDCO board and the city council, includes $4.5 million in sales tax revenues for the economic developer against $9.19 million in expenses. However, these numbers could shift throughout the year as possible incentives and more concrete revenue numbers come in.

"That's a hard question to answer because we have some projects that we are working on besides TI," SEDCO President Kent Sharp said. "Everyone knows about the TI project."

TI recently announced the the Sherman location of the manufacturing company is in the running to be the site of a future multi-billion dollar production site.

SEDCO's budget comes as Texas Instruments has announced that Sherman is a finalist city for a proposed multi-billion dollar production site that would bring with it thousands of jobs and significant investment in the community. While SEDCO has not been approached by TI for incentives yet, Sharp could rule out some involvement by SEDCO in the project.

SEDCO is slated to end the current fiscal year with $4.85 million of sales tax revenues — a 13.5 percent increase over what was taken in in the 2019-2020 fiscal year. By comparison, the economic developer initially budgeted to earn $4.05 million through its sales tax revenue.

Sherman's sales tax boom can be seen in the budget document itself. The budget lists SEDCO as earning $4.66 million for 2020-2021. However, this was based on data and predictions from earlier this year that did not reflect a sales tax boom for the city over the summer.

Using the data from earlier this year, SEDCO budgeted for $4.5 million in sales tax revenue for 2021-2022, but Sharp said revenues could be closer to $5 million, if not higher.

"I'd say we've been hitting a high point for most of this year with reserve. Our sales tax has been significant this year and I usually say that we bring in about $4 million. Now I am going to have to start saying we bring in about  $5 million."

The largest expense that is included in the upcoming budget is $7 million that will be dedicated to the construction of a new shell industrial building in Progress Park 5 Industrial Park. Earlier this year, SEDCO approved $105,000 for the design of a industrial building amid high industry demand for existing industrial sites.

"Out of 10 calls we get from manufacturers looking to expand or relocate, eight of 10 will say existing buildings only. If you only have land, do not apply," Sharp said in May.

Sherman and the Sherman Economic Development Corporation ended the fiscal year 2021 budget planning season this week.

Sharp previously said he hoped that the 78,000 square-foot shell building could prove the market demand for industrial sites in Sherman and serve as a catalyst for future private development.

Sharp included the full $7 million price tag for the building in the upcoming budget, which would leave SEDCO with just over $9 million in reserves for future projects and incentives. However, Sharp noted that several financing options are available, including the possibility of paying for the building over time using bonds.

This could free up funds over the next year that could then be used for future incentives or other projects.

Another question the hangs over the budget is the possible expansion of Texas Instruments operations in Sherman, which Sharp described as a potential watershed moment for the city and its development. Currently, the Sherman Independent School District is the only taxing entity that has acted on the proposed development.

Sherman Independent School District has already accepted an application for property tax incentives under Texas tax code 313 for the proposed Texas Instruments multi-billion dollar project.

The school district accepted an application for property tax incentives under Texas tax code 313, which gives school districts the ability to approve tax abatements for developments with more than $1 billion of investment.

More:Paving way for new multi-billion dollar facility, SISD accepts TI tax abatement application

Pending legal review, the agreement will be presented to the Texas Comptroller for final approval.

Sharp said many incentives would likely go through the city itself, but he could not rule out SEDCO being involved in the project in some form. As an example, he said the economic development could assist in financing utility improvements for the site.

"If TI comes there are a lot of things that come with it," he said. "There may be so much  activity that follows TI deal that say ... we don't need the spec building any more."