Government
BY HALEY MCLEOD
Dell signs century-long agreement with the city of Round Rock
Round Rock City Council approved April 25 an amendment to a 1993 economic development agreement with Dell Inc., extending the original contract from 60 years to 106 years. “This has been a great relationship and, quite honestly, it changed the trajectory of Round Rock,” Place 2 City Council member Rene Flores said. The agreement between Dell and Round Rock represents the rst Chapter 380 economic devel- opment agreement within the state of Texas, resulting in the tech company locating its global headquarters in Round Rock in 1994. “The 1993 agreement established the terms that kickstarted the sustainable growth of Round Rock. ... The terms of the original agreement solidi ed what is now a statewide philosophy of perfor- mance-based economic development programs,” Assistant City Manager Brooks Bennett said. The impact Largely expanding the city’s property tax base, the initial agreement has resulted in the comple- tion of a list of major infrastructure projects for the city, which have individually cost millions of dollars. The sales generated by Dell also contribute to the city’s general fund revenue, allowing Round Rock to o set residential property taxes with sales tax income, city o cials stated in a news release. Having the company’s global headquarters located within the city has generated an estimated 3.5 million jobs, according to city o cials. Over the life of the agreement, the city has seen more than $429 million in sales tax revenues. The sales tax component of the agreement “is so impactful on city operations,” it has prompted
Round Rock City Council and Dell Technologies Senior Vice President Mark Pringle, third from left, celebrated an extension of an economic development agreement April 25. (Courtesy city of Round Rock)
Capital improvement projects funded through Dell property tax to date:
• Expansion of water plant • New wastewater treatment plant • Major road projects • Development of 570 acres into Old Settlers Park
SOURCE: CITY OF ROUND ROCK COMMUNITY IMPACT
Round Rock to enact a policy to reduce the dependence on a single taxpayer, according to a statement from city o cials. Any net sales tax revenue received from Dell over 15% of the revenue funneled to the city’s general fund is then directed to a separate fund—the general self- nance construction fund—that is used for one-time capital improvement expenditures. The details The amendment approved by City Council extends the termination date of the contract from December 2053 to December 2099. The terms of the Chapter 380 agreement remains unchanged.
Under a Chapter 380 agreement, a company and taxing entity negotiate a contract to provide tax incentives for the company in return for devel- opment or redevelopment, generating additional sales tax revenue or enhancing the city’s property tax base, according to Round Rock’s economic development transparency website. These programs often provide payments, or grants, from the city to the company that repre- sent property tax and sales tax abatements. Dell receives a 50% share from the property taxes it pays and retains 31.25% of the portion of sales tax it generates from the city of Round Rock, according to city documents.
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