CUSHING, TX (KTRE) - The Nacogdoches Generating Plant, a biomass facility, is reaching for the sky as beams go into place. Steel has reached a third level, support buildings are in place, and construction crews work steadily.
Construction headway is also seen in the Cushing school district. A new elementary school is taking shape, while the Cushing Bearkats are sporting a new stadium.
Bonds finance the improvements, but a lucrative tax deal struck with the biomass plant seals the bond's payback.
"It's $600,000 a year for 18 years beginning 2012-2013 school year," shared Michael Davis, superintendent for Cushing ISD. The 20 year revenue from the plant from local ad-valorem taxes is projected to be approximately $58 million, according to Southern Power, the current developer.
The Legislative Budget Board recommends in a report to take this kind of negotiating power away from school districts, especially when the state is facing a $20 billion shortfall.
The report says school districts should not be responsible for economic development. Nacogdoches County economic developers say school districts should certainly be participants.
"Only one time has a school district negotiated tax incentives and that was Cushing. It doesn't happen very often and it's usually a move reserved for very big projects, said Bill King, CEO for Nacogdoches Economic Development Corporation.
Southern Company, the biomass plant's owners, released this statement. "Southern Company supports local tax incentives that provide revenue to the local school districts while enhancing a community's ability to attract large businesses - as were in-place when we acquired the Nacogdoches generating facility. Although we did not negotiate those incentives, we would certainly negotiate in good faith with the agency having responsibility under state law, as we do in all the communities where we're a neighbor."
"Right now, to me, it seems like it's about who has control. Who gets to control and determine where those tax revenues go," said King.
In Cushing's case, the taxes paid by the developer would have gone straight back to the state, a requirement for property wealthy school districts, like the oil rich Cushing ISD.
Yet the district took full advantage of 2001 legislation that gave school boards bargaining rights to help attract large industrial projects. Now, lawmakers may have another purpose for the local tax dollars.
"Everybody is looking for an answer and if it's not broke let's break it and try it again," is how Davis interprets it.
Right now, Cushing thinks the deal they had the foresight to strike is safe.