Termination of the Fate Development Corporation Election
On the May 1, 2021, ballot Proposition B is asking Fate voters about the Termination of the Fate Development Corporation (Type B) and its associated sales tax; and the adoption of a local sales and use tax in the City of Fate at a rate of one and one-half (1.5) percent. This would result in zero net change in the total sales tax rate.
What is the FDC?
The Fate Development Corporation (FDC) is a Type B corporation identified within the Development Corporation Act of 1979 that gives cities the ability to finance new and expanded business enterprises in their local communities through economic development corporations. Chapters 501, 504, and 505 of the Local Government Code outline the characteristics of Type A and Type B EDCs, authorize cities to adopt a sales tax to fund the corporations and define projects EDCs are allowed to undertake.
Why is the City considering dissolving the FDC?
To mitigate the redundancy of multiple economic development entities, the City identified the entity best structured to achieve the goals identified in the Economic Development Strategic Plan (EDSP) and then recommends reallocating the tax obligation for the weakest organization back to the City’s general fund which can still be used to fund economic development related projects and other essential services such as DPS.
What is planned to replace the FDC?
The City also operates a Municipal Development District (MDD). An MDD is a special purpose district created for the purpose of generating economic development and growth opportunities within the boundaries of the district. The MDD performs the exact same types of projects as are currently allowed by the FDC, namely projects related to: retail; restaurant; concession; parking facilities; area transportation facilities; roads; streets; general municipally owned improvements; water and sewer facilities; drainage; demolition; entertainment; tourism; conventions; public parks: including stadiums, ballparks, amateur sports, athletics, auditoriums, amphitheaters, concert halls, parks, and park facilities; municipal buildings; museums; exhibition facilities; and other related improvements that enhance any of those items.
The major difference is that an MDD can impose a one-half of one percent (0.5%) sales tax in the ETJ of the City. The FDC can only impose its sales tax within City limits.
Will there be an increased tax burden if the FDC is dissolved?
There will be no additional taxes imposed on the citizens within the City limits. Should voters choose to dissolve the FDC, the one-half percent (.5%) sales tax currently obligated to the FDC will be reallocated to the City’s general fund to continue to support the economic development programs and potentially other essential services, such as DPS.
What will Proposition B look like on the May 1, 2021, ballot?
CITY OF FATE, TEXAS PROPOSITION B
TERMINATION OF THE FATE DEVELOPMENT CORPORATION (TYPE B) AND ITS ASSOCIATED SALES TAX; AND THE ADOPTION OF A LOCAL SALES AND USE TAX IN THE CITY OF FATE AT A RATE OF ONE AND ONE-HALF (1.5) PERCENT. THIS WOULD RESULT IN NO NET CHANGE IN THE TOTAL SALES TAX RATE.