TI gets 90 percent abatement, rebate agreement from Sherman

Michael Hutchins
Herald Democrat
Sherman leaders unanimously approved an agreement Monday that would abate or rebate Texas Instruments' property taxes for the next 30 years.

A proposed multi-billion dollar Texas Instruments production plant took one step forward toward fruition Monday when the Sherman approved a series of abatements and rebates for the project. The City Council voted unanimously to approve eight agreements for the project which would effectively abate the 90 percent of property taxes for the project for the first 30 years of the new facility.

Sherman is the first of four taxing entities to take action on approving incentives and abatements for the project with Grayson County following suit Tuesday morning.

More:Two down, two to go: Grayson County approves Texas Instruments incentives

The city council approved a total of eight agreements for the project with two for each phase. These agreements include a 10-year property tax abatement at 90 percent. Then, a 20-year tax rebate will be offered by the city for each phase as tax abatements are limited to 10 years under current law. In addition to this, the city also offered a 20 percent reduction to water and sewer rates for the facility.

The Sherman City Council unanimously agreed to abate the property taxes for a proposed $29.4 billion Texas Instruments production site Monday night.

More:Sherman creates TI investment zone, sets stage for tax abatements

"There were a lot of numbers thrown out tonight — a lot of big numbers," Council Member Pam Howeth said, noting that the council did not take the discussions lightly. "We kind of get used to working with millions (or dollars) but none of us are used to working with billions of dollars."

Despite the reduction on its property tax revenues, City Manager Robby Hefton said the city is poised to benefit in many ways from the new facility. The plant is expected to create 3,200 new jobs and the city could see an increase in sales tax revenues during the construction phase. The abatement will go into effect once construction completes, which will allow the city to draw full value during the construction phase.

During the abatement period, Hefton said the new facility will still create about $220 million in tax revenues and an estimated $1 billion in water and sewer fees. These utility fees will allow the city to offset some of the costs from system improvements and operations and result in lower costs for residential property owners.

The agreements include a $2 billion minimum investment for the first phase that Texas Instruments must make in order to receive the incentives. This represents about 31 percent of the expected investment. By comparison, the city's agreement with Panda Power represented only 19 percent of the expected investment.

While some members of the council voiced some concerns with the abatements, these issues did not outweigh the benefit to the community in the minds of the council members, who passed all eight agreements unanimously.

More:SEDCO approves $9.19M budget amid potential TI project

Shawn Teamann said he would have liked to see changes to the investment, and that he had some minor concerns over language in the contract. However, this was not enough for him to vote against the proposal.

"With that in consideration, I do believe that this will have a much larger financial impact on the school system than it does necessarily for the city of Sherman and because of that impact, I feel that I would be in support," Teamann said.

Likewise, Sandra  Melton said she disagreed with the 90 percent abatement, but she still sees the new facility as a boon for the community.

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

 Hefton said he expects the two remaining entities — Sherman Independent School District and Grayson College — to consider similar agreements within coming weeks. The school district accepted a tax abatement application from the company in August, but has this agreement has not been put in place yet. 

Once these agreements are in place, Hefton said he hoped to hear back on a final decision from TI by the end of the year.

"We are in the running, but they will make their decision hopefully soon, very soon," he said. "Our consideration of these incentive agreements will be the the next step for them to consider us being selected as the site."

About the project

Texas Instruments announced in August that Sherman was one of two finalist communities — alongside Singapore— being considered for a new production plant that would be built across four phases with an estimated $29.4 billion of investment.

The new facility would effectively replace the current plant, which is scheduled to be phased out by 2025. Where the current facility manufactures 150 mm silicon wafers for use in electronics and other uses, the new facility would produce more modern 300 mm wafers. 

The new facilities would be built on the nearly 550 acres of land that the company owners alongside its current facility. Each of the four proposed phases would include more than 1 million square feet of production space with some also including office and administration space, Hefton said.

Each phase will have a roughly two- to three-year construction phase, with production expected to begin in 2025, 2031, 2036 and 2039, respectively.

More:New TI plant could bring $29B investment