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SIX O'CLOCK MIGHT[1. CALL SESSION TO ORDER ]
BE.CALL THE CITY COUNCIL WORK SESSION FOR THURSDAY, APRIL 20TH, 2023 TO ORDER.
START WITH ROLL CALL COUNCIL MEMBER SEVEN HERE.
[3.1. Review and discuss Chapter 312 Agreements and discussion of creating a Tax Abatement Zone within the boundaries of the Tax Increment Reinvestment Zone 3. (TIRZ 3 - Megasite) (Larry Gaddes) ]
WE HAVE, UH, ITEM THREE ONE, REVIEW AND DISCUSS CHAPTER THREE 12 AGREEMENTS AND DISCUSSION OF CREATING A TAX ABATEMENT ZONE WITHIN THE BOUNDARIES OF THE TAX INCREMENT REINVESTMENT.HELLO, HOW ARE YOU DOING? LARRY? LARRY IS OUR GUEST.
WHEN WE PROMISED YOU WOULDN'T HAVE TO GIVE THE WHOLE PRESENTATION, SO WE'RE GIVE A A LITTLE BIT OF A BREAK AND A COUPLE SLIDES BEFORE WE GET.
IS THAT OKAY? MIND? I'M SITTING RIGHT HERE, NOT DO ANYTHING ELSE.
SO THE FIRST, THE FIRST PART OF THIS IS JUST A QUICK REVIEW OF WHERE WE WERE LAST TIME WHEN WE MET.
UM, AND I THINK DONNIE GAVE A, A REALLY GOOD OVERVIEW PRESENTATION OF WHAT THREE 12 DOES, AGAIN, DEFINED IN THE LOCAL GOVERNMENT CODE IN SECTION THREE 12, STRANGELY ENOUGH, ECONOMIC DEVELOPMENT TOOL THAT TYPICALLY TARGETS THE LARGER INVESTMENTS, HIGHER DOLLAR VALUE INVESTMENTS.
IT USED TO BE A LITTLE BIT MORE, UH, THREE 80 S WERE A LITTLE BIT MORE FAVORED IN YEARS PAST, BUT FOR A VARIETY OF REASONS.
UM, THE THREE TWELVES, UH, HAVE SORT OF COME BACK INTO VOGUE IN OUR WAY OF KIND OF PROTECTING YOURSELF A LITTLE BIT FROM ROLLBACKS AND OTHER KINDS OF UNINTENDED CONSEQUENCES OF THE LARGE, UH, IN SEVENTH CITY HERE, COUNTY CAN PARTICIPATE.
THOSE ARE THE ELIGIBLE ENTITIES AND IT CAN APPLY TO ALL OR A PORTION OF REAL AND BUSINESS PERSONAL PROPERTY.
LAST TIME I KNOW THERE WAS A LITTLE DISCUSSION AND THERE'S A LITTLE CONFUSION ABOUT WHETHER BUSINESS PERSONAL PROPERTY WAS IN OR OUT.
IT'S MOST DEFINITELY IN, UM, AND AGAIN, IN THE PROJECTS THAT WE'VE BEEN TALKING ABOUT, THAT'S WHERE THE, THE REAL MONEY IS.
SO THAT'S PRIMARILY WHY WE, WE WANT TO FOCUS ON THREE 12.
TYPICAL TERM IS, UH, IS TECHNIC AGAIN, AS WE SAID EARLIER, AS A COMPARISON WITH THE THREE 80 AGREEMENT.
TYPICALLY IT'S BEEN BETTER SUITED FOR LARGER INVESTMENTS.
UM, AGAIN, WITH THERE'S LARGE PROPERTY VALUES BEING ADDED TO THE TAX ROLES.
UM, THE ADVANTAGE IS THAT BOTTOM LINE, WHICH IS AS YOU ADD A TAX BASE, YOU'RE ONLY REALLY ADDING TO THE BASE WHAT YOU'RE COLLECTING.
SO IF YOU BAIT 20%, 50%, WHATEVER, UH, THE PART THAT YOU ADD IS THE PART THAT YOU DID NOT, UH, THAT YOU HAD BAITED, UH, AND THEREFORE YOU'RE ONLY BEING, YOUR, YOUR INCREMENTS ARE ONLY GROWING.
UM, THREE 80 S CONTINUE TO BE USED FOR SALES TAX RELATED ACTIVITIES.
UM, THEY, BOTH GROUPS ARE PERFORMANCE RELATED.
UM, BUT IN THE THREE 80 S THEY TEND TO BE MORE TIED SPECIFICALLY TO, UH, DEMONSTRATIVE SALES REVENUES ASSOCIATED WITH THE PROJECT.
UM, WHEN THEY'RE USED FOR LARGER PROPERTY TAX RELATED ACTIVITIES, UM, YOU COLLECT ALL OF THE TAX AND THEN YOU REIMBURSE.
UM, AND THAT HAS CAUSED SOME DIFFICULTIES AT TIMES WITH, UH, ENTITIES THAT ARE CONSIDERING, UH, POSSIBILITY THAT THEY GET ACCUSED OF HAVING COLLECTED MONEY AND THEREFORE THEY COULDN'T LOWER THEIR TAX RATES BECAUSE THEY'RE, THEY'RE NOT USING THE MONEY THEY'RE COLLECTING.
I GOTTA REMEMBER HOW TO BE AN ADMINISTRATIVE.
SO AGAIN, IN THE UH, THREE 12 CASE FOR SKYBOX, UM, OBVIOUSLY THIS WAS A MULTI-BILLION DOLLAR POTENTIAL INVESTMENT.
IF THEY BUILT EVERYTHING THAT'S POSSIBLE ON THE, ON THE SITE, UM, THEY'RE REACTING TO A NATIONAL STRENGTH AND DATA CENTER GROWTH.
UM, LAST C B R E RELATED DATA THAT WE HAD ACCESS TO YEAR OVER YEAR WAS 17% GROWTH IN THAT INDUSTRY SEGMENT.
UM, IT DOESN'T SHOW TREMENDOUS NUMBER OF SIGNS THAT THAT'S PERCENTAGE IS GONNA DECREASE.
VACANCY RATES FOR EXISTING CENTERS ARE EXTREMELY LOW.
SO ONE OF THE OTHER QUESTIONS THAT HAD COME UP, AND WE TALKED ABOUT IT LAST TIME WAS, WHAT HAPPENS IF SOMEBODY COMES AND GOES, OH YEAH, I CAN JUST GO ACROSS THE STREET AND I'LL JUST GET IN SOMEBODY'S OLD DATA CENTER, BOOM, I'M SET.
UM, THAT WORKS IF YOU HAVE VACANCIES.
IT DOESN'T OBVIOUSLY WORK IF YOU'RE AT 1%.
UM, AND SAN ANTONIO AND AUSTIN ARE AMONG THE LOWEST IN THE COUNTRY.
UH, SAN FRANCISCO, WHICH HAS ALSO BEEN IN OUR SILICON VALLEY, WHICH HAS BEEN THE BIG DATA CENTER HIGH ALONG WITH NORTHERN VIRGINIA, HAVE A LITTLE BIT HIGHER VACANCY RATES, BUT THEY'RE ALSO RUNNING OUT POWER.
AND SO THE OTHER DIMENSION TO THIS BESIDES BUILDING BUILDINGS IS CAN YOU TAP INTO THE AMOUNT OF POWER TODAY? SO HATO VIA ENCORE AND THE SIZE OF OUR LAND IS A LITTLE BIT OF A, THE MOMENT PERFECT STORM OF THE ABILITY TO GET POWER AND GET REAL ESTATE
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AT A REASONABLE PRICE.UM, WE ALSO HAD QUESTIONS ABOUT TAX AND LEASING.
UM, AND AGAIN, NOT SURPRISINGLY, THESE ARE NOT INEXPENSIVE, UH, FACILITIES.
SO THE LEASE TERMS TEND TO BE 10 PLUS YEARS, SOMETIMES 10 TO 12 YEARS.
UM, 95% ACCORDING TO THE C B R E DATA OF PEOPLE LEASING ONE 10 YEAR TERM LEASE OF SECOND TENURE.
PEOPLE DO LEAD DATA CENTERS, THEY BUILD DATA CENTERS, BUT THEY ALSO CONTINUE TO LEASE AND BUILD DATA CENTERS.
SO IT SEEMS PRETTY UNLIKELY BASED ON THE NATIONAL DATA THAT WE'D SUDDENLY WAKE UP ONE DAY AND HALF OF THE DATA PART WOULD BE EMPTY.
UM, ALTHOUGH THEY MAY BE A DIFFERENT USER THERE TIME, UH, AND AGAIN, THAT NUMBER OF IT CAME DOWN, SOME WOULD STILL BE PRETTY ASTRONOMICAL RELATIVE TO TYPICAL, UH, DUAL RATES.
IN, IN MOST ASSET CLASSES, THERE IS A LONGER TERM BUILDOUT.
UM, THE REASON THAT'S IMPORTANT IN THIS CASE IS IF WE HAD TO TAKE 3.8 MILLION SQUARE FEET AND CRAM IT INTO THE TAX ROLLS IN TWO YEARS OR THREE YEARS, THAT WOULD BE A POTENTIAL BIG HIT.
UM, THE LIKELIHOOD OF THAT HAPPENING AS A, AS A BILL SCENARIO IS NOT PARTICULARLY HIGH.
EVEN WITH THE AUSTIN ADVANTAGES THAT ARE HERE.
UM, IT TAKES ABOUT A YEAR AND A HALF JUST TO PREP THE SITE, BUILD POWER, ET CETERA.
IT TYPICALLY TAKES ABOUT 12 MONTHS TO BUILD THE SHELL IN THE BUILDING AND IT TAKES 12 TO 18 MONTHS TO OUTFIT THE BUILDING.
SO THAT GIVES YOU THE SORT OF APPROXIMATE TIMEFRAME TO STAND ONE OF THESE BUILDINGS UP.
AND THAT DOES GIVE US SOME PROTECTIONS ABOUT FUTURE TAX IMPLICATIONS.
UM, AGAIN, TO LARRY'S POINT, WHEN HE HELPED US RUN THE NUMBERS AT FULL BUILDOUT UNDER THE DEPRECIATION SCHEDULE, THE COUNTY'S USING, YOU COULD GET ALL THE WAY TO 6 BILLION OR SIX OR 7 BILLION WORTH OF INVESTMENT.
IT'S OUR ADVA NOW ACCORDING TO FINANCES, I THINK RIGHT AT 6 BILLION.
SO IF IT WAS ALL COMING ONLINE TOMORROW, UM, MIGHT BE A BIT OF AN ISSUE.
UM, BUT THE LAST YEAR THAT WE HAD THE TAX REVENUES, THE ADVA ALARM WENT UP A BILLION DOLLARS IN HU WITHOUT ANY OF SIGNIFICANT COMMERCIAL INVESTMENT AT ALL.
SO THE OTHER PART OF THIS MOVING TARGET IS HOW MUCH NATURAL GROWTH ARE WE GONNA HAVE? CAN WE REALLY JUST ISOLATE IN THE DATA CENTER OR DO YOU HAVE TO KIND OF LOOK AT IT MORE HOLISTICALLY, YOU KNOW, AS A RESULT OF OTHER GROWTH THAT'S GONNA OCCUR IN THE MARKET TIME? I'M PRETTY SURE IT'S CUZ WE HARD CHAIN.
WE'VE DEFINITELY GOT AT LEAST A BILLION
SO LARRY DID A LITTLE WORK WITH US BEHIND THE SCENES TO HELP US TRY TO UNDERSTAND THE QUESTIONS THAT YOU HAD POSED.
UM, PARTICULARLY IS IT RELATED TO THE VELOCITY OF THIS INVESTMENT AND HOW THAT WOULD THEN TURN AROUND POTENTIALLY AN IMPACT.
YOU KNOW, OUR TAX RATES AND HE'S GOT A FEW THOUGHTS ABOUT THAT.
UM, HE GAVE US VERY, UH,
AND WE DO HAVE SOME NUMBERS FOR EXEC.
UM, BUT AGAIN, IT'S, IT'S ALL BASED ON WHAT NOW IS THE NET NEW INCREASE, THE BILLION DOLLARS THAT'S OCCURRED IN TOWN.
UM, AND SO WE'LL KIND OF GO OVER THAT, BUT YOU CAN MAYBE SPEAK A LITTLE BIT TO SOME OF THE IMPLICATIONS OF THAT.
AND WE TALKED ABOUT THE FORECASTING CHALLENGES.
BUT WHEN YOU TRY TO GO OUT FOUR OR FIVE YEARS WITH ALL THE MOVING TARGET PIECES THAT WE HAVE TO DEAL WITH IN TERMS OF VALUATIONS AND SO ON AND SO FORTH, UM, IT IS VERY, VERY CHALLENGING TO TRY TO PICK A POINT IN TIME AND COME UP WITH A CONCRETE ESTIMATE THAT SAYS THIS IS EXACTLY WHAT YOUR RATE'S GONNA BE IN YEAR SIX OR YEAR SEVEN.
SO IT, I I WENT THROUGH A FEW ITERATIONS OF TRYING TO APPEASE COUNTY COMMISSIONERS OF QUESTIONS ABOUT, YOU KNOW, DIFFERENT, DIFFERENT PROJECTS MOVING TO THE COUNTY AND WHAT THE IMPLICATIONS ORDER.
AND UM, I TOOK A STAB AT IT A COUPLE OF TIMES AND I REALIZED I HAD SPENT DAYS AND DAYS WORTH OF, OF MY TIME TO JUST COME UP WITH A NUMBER WHO THAT AT THE END OF, AT THE END OF 10 YEARS, WHO KNOWS WHAT THAT NUMBER'S GONNA BE BECAUSE I DIDN'T HAVE ENOUGH CRYSTAL BALLS, UM, IN MY CLOSET TO TRY TO FIGURE OUT.
THERE'S A NUMBER OF THINGS THAT, THAT, UM, BOB AND HIS TEAM WOULD EVEN BE ABLE TO HAVE A GOOD GUESS AT IT.
YOU KNOW, WHAT, WHAT TAX RATES ARE THE NEXT YEAR, 10 YEARS OF CITY COUNCIL MEMBERS GOING TO ADOPT.
UH, IF ANYBODY CAN TELL ME WHAT THE REAL ESTATE MARKET IS GONNA DO FOR THE NEXT 10 YEARS, I'D LOVE TO TO TO KNOW WHAT THAT IS AS WELL.
WHAT WHAT IS THE, JUST THE GENERAL ECONOMY GONNA DO? CUZ UH, Y'ALL'S TAX RATE DEPENDS HEAVILY ON WHAT THE SALES TAX REVENUE IS GOING
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TO BE.UM, HOW MUCH DEBT ARE YOU GONNA INCUR OVER THE NEXT 10 YEARS? UH, ALL OF THOSE THINGS.
AND THAT'S JUST A, A SMALL HANDFUL, UM, OF, OF THE THINGS THAT HAVE TO BE CONSIDERED.
BUT, UM, THOSE ARE A SMALL HANDFUL OF THINGS THAT HAVE TO BE CONSIDERED.
SO, UH, TO, YOU COULD HAVE A HUNDRED ITERATIONS OF, OF, UM, DIFFERENT, I THINK, UH, SCENARIOS THAT YOU'D WANT TO SEE PLAY OUT AND THEN BLINDFOLD YOURSELF AND THROW A DART AT ONE OF THOSE HUNDRED TO FIGURE OUT AND TAKE A GUESS AT WHICH ONE MIGHT ACTUALLY YOU MIGHT ACTUALLY BE GETTING CLOSE TO.
BUT I THINK THERE'S SOME, JUST SOME GENERAL ASSUMPTIONS YOU CAN MAKE WHEN YOU'RE, WHEN YOU'RE GOING THROUGH THIS, UM, THAT, YOU KNOW, TO KEEP IN MIND NOT KNOWING WHAT THE FUTURE'S GONNA HOLD.
MAYBE MAYBE BEING ABLE TO LOOK AT, I THINK, BOB, YOU SAID YOU HAD LOOKED AT MAYBE TWO OR THREE YEARS DOWN THE ROAD.
UM, 10 YEARS WOULD BE EXTREMELY DIFFICULT.
UM, BUT, UH, JUST, I, I DON'T KNOW IF THE COUNCIL HAS, HAS TALKED ABOUT DOING, UM, 3 81 AGREEMENTS, UM, IF THAT WAS A CONSIDERATION OR IF Y'ALL ARE, IF Y'ALL, IF Y'ALL HAVE ONLY TALKED ABOUT THREE 12, THE 3 81 S PRESENT SOME ISSUES, UM, FOR, UH, ESPECIALLY I WOULD SAY SMALLER TAXING UNITS WHERE, UH, IF YOU'RE LOOKING AT A, AT A, AT AN AGREEMENT THAT, UH, WILL CREATE, UH, A LARGE AMOUNT OF TAXABLE VALUE COMPARED TO YOUR RELATIVE TOTAL TAXABLE VALUE.
UM, YOU COULD BE WRITING A CHECK WITH MONEY YOU DON'T HAVE AT, AT THE NEAR THE END OF THAT 10 YEAR CYCLE.
UM, SO THERE, THERE ARE SOME, DEFINITELY SOME CONSIDERATIONS TO BE MADE FOR THAT.
SO I'M, I'M GLAD TO HEAR ABOUT THE, THE THREE TWELVES THAT Y'ALL ARE LOOKING AT AT THREE 12.
I THINK IT'S A VERY CLEAN, IF Y'ALL WANT TO KNOW MY OPINION, IT IS A, IT IS A CLEAN, UM, TYPE OF AGREEMENT.
THERE ARE SOME THINGS I'D, I'D ASK FOR Y'ALL TO CONSIDER WHOEVER'S SITTING DOWN AND, AND, AND DRAWING UP THAT AGREEMENT.
SOME THINGS TO CONSIDER, UM, TO AVOID SOME COMPLICATIONS IN THE FUTURE.
BUT, UM, WHAT IT KEEPS YOU FROM DOING IS, UM, GOING THROUGH THE PROPERTY TAX PROCESS ON, ON MY END AND ON THE END OF THE APPRAISAL DISTRICT, UM, YOU, YOU NOTIFY THE APPRAISAL DISTRICT THAT THIS COMPANY'S MET ALL OF YOUR REQUIREMENTS ACCORDING TO YOUR AGREEMENT.
THE APPRAISAL DISTRICT SAYS, OKAY, HERE'S THEIR VALUE, CUT IT IN HALF.
IF IT'S A 50% ABATEMENT, UM, CUT THAT VALUE IN HALF OR REFLECT THAT ON, ON THE VALUATION OF THE PROPERTY AND YOU MOVE ON DOWN THE ROAD, THE, THE COMPANY GETS A TAX BILL FROM ME WITH, WITH THAT VALUE, UM, BEING ABATED REFLECTED ON THE, ON THE TAX BILL, THEY PAY THEIR TAXES AND EVERYBODY MOVES ON.
AND YOU DON'T HAVE TO THINK TWICE ABOUT THAT.
UM, SOME THINGS I WOULD, I WOULD CONSIDER IF, IF Y'ALL ARE GOING TO GO DOWN THAT ROAD IS, UM, THE APPRAISAL DISTRICT, I THINK IN THE PAST HAS, HAS HAD, UM, AN ENTITY PRESENT TO THEM, HEY, THEY DIDN'T MEET ALL THE REQUIREMENTS, UH, FOR THE ABATEMENT THAT AS WE AGREED UPON, BUT WE DON'T WANT TO JUST CUT IT OFF COMPLETELY.
SO GO AHEAD AND GIVE THEM, UM, INSTEAD OF, UH, 80% OF THE ABATEMENT, LET'S, LET'S CALL IT 40%.
SO THEY'RE INSTRUCTING THE APPRAISAL DISTRICT TO DO SOMETHING THAT WAS WAY OUTSIDE THE BOUNDS OF, OF THE AGREEMENT.
AND, UM, THE APPRAISAL DISTRICT WAS NOT COMFORTABLE WITH THAT.
AND WITH, AND, AND OF COURSE THIS GOES BACK A DECADE OR MORE, UM, BUT WITH THE INFORMATION THAT TAXPAYERS HAVE AT THEIR, AT THEIR, UH, FINGERTIPS NOWADAYS, I WOULD NOT WANT THE APPRAISAL DISTRICT OR, UM, ANY TAXING ENTITY TO HAVE, UM, THEIR INTEGRITY CALLED INTO QUESTION BY, UM, NOT FOLLOWING THE RULES OF AN AGREEMENT, YOU KNOW, BETWEEN A A A A BUSINESS AND, AND THE TAXING UNIT.
SO IF Y'ALL ARE GOING TO GO DOWN THIS ROAD WITH A COMPANY, I WOULD STRONGLY CONSIDER, AND I DON'T KNOW THAT, THAT THIS IS SOMETHING THAT REGULARLY OCCURS, BUT IF YOU'RE LOOKING AT CERTAIN REQUIREMENTS, UM, FOR A BUSINESS, MAYBE TEAR IT, PUT, PUT IT IN, PUT IT INTO TIER.
IF Y'ALL ACHIEVE THIS MUCH, WHAT I SEE AND WHAT I HEAR FROM COMPANIES IS THEY PROMISE THE MOON WE'RE GONNA BRING YOU HUNDREDS OF FULL-TIME JOBS, AND MAYBE NOT IN THE CASE THE DATA CENTER, BUT WE'RE GONNA BRING THIS MUCH VALUE AND THIS MANY JOBS AND AND SO ON AND SO FORTH.
AND THEY PROMISE THE MOON AND SOMETIMES THEY DON'T DELIVER, UM, ON THOSE.
AND THOSE LOWER REQUIREMENTS AREN'T ALWAYS INCLUDED IN, IN AN AGREEMENT.
SO IF YOU DO WRITE SOMETHING UP, I WOULD STRONGLY, STRONGLY CONSIDER IT MAYBE BEING TIERED.
IF YOU MEET, MEET THESE QUALIFICATIONS, THE, THE MORE YOU CAN MEET, THE HIGHER YOUR, YOUR ABATEMENT GOES, UM, INSTEAD
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OF MAYBE ON THE BACK END ASKING THE APPRAISAL DISTRICT TO DO SOMETHING THAT ISN'T IN LINE WITH THE, WITH, WITH AN AGREEMENT.SO, UM, AGAIN, THAT'S JUST SOMETHING I HEAR ON THE SIDE.
THE NICE THING, I'LL TELL YOU THIS, I'M NOT AN EXPERT ON AGREEMENTS BECAUSE I DON'T HAVE TO DEAL WITH THEM.
UM, LIKE I SAID EARLIER, I I, I, I CAN DEAL WITH THE CONSEQUENCES AND THEY'RE VERY SIMPLE TO DEAL WITH, BUT, UM, THIS WILL BE A CONVERSATION AND A DOCUMENT THAT YOU WOULD HAND OVER TO THE APPRAISAL DISTRICT BECAUSE THEY WOULD BE THE ONES THAT ACTUALLY IMPLEMENT, UM, THE AGREEMENT THAT Y'ALL, THAT Y'ALL PUT IN PLACE.
SO YOU WOULD, UM, WRITE UP THE REQUIREMENTS AND AT A POINT IN TIME YOU WOULD GO TO THE APPRAISAL DISTRICT DISTRICT AND SAY, OKAY, SKY BOX HAS, SKY BOX HAS MET ALL OF THE REQUIREMENTS ACCORDING TO THE AGREEMENT.
PLEASE ABATE THE, THE AMOUNT OF OF VALUE, UH, THAT'S, UH, AGREED UPON IN THE, IN OUR DEVELOPMENT AGREEMENT.
AND THEY DO THAT, THEY SEND THE VALUE TO US, UM, AND WE CREATE A TAX BILL REFLECTING THAT AND, AND THEN THAT, AND THEN IT'S DONE.
YOU DON'T, YOU KNOW, THERE'S NOTHING ELSE TO WORRY ABOUT.
THERE'S SOME TIMING IMPLICATIONS THERE, THE APPRAISAL DISTRICT.
SO ALSO WHEN YOU WRITE AN AGREEMENT, YOU'RE GONNA ASK, UM, IN ANY AGREEMENT THAT YOU WRITE, YOU'RE GONNA ASK THAT COMPANY TO PROVIDE YOU WITH INFORMATION SO YOU CAN SEE THAT THEY HAVE MET THE REQUIREMENTS OR NOT.
UM, UH, THE APPRAISAL DISTRICT WILL NEED TO KNOW WHETHER THEY FLIP THE SWITCH ON THAT AGREEMENT BY PROBABLY, I WOULD SAY MAYBE BY FEBRUARY OR MARCH.
AS Y'ALL KNOW, Y'ALL HAVE PROBABLY RECEIVED YOUR NOTICES OF APPRAISED VALUE IN THE MAIL.
UM, UM, ANY COMPANY YOU, YOU ENGAGE WITH IS GONNA BE GETTING THAT SAME NOTICE AROUND THIS TIME, UH, FOR IF IT'S B P P RELATED, OF COURSE THEY HAVE TO RENDER TO THE APPRAISAL DISTRICT.
UM, AND I THINK THE DEADLINE IS MAY, APRIL 15TH OR MAYBE APRIL 30TH, NOT MY AREA OF EXPERTISE, BUT IT IS AROUND NOW.
UM, AND, UH, THE B P PORTION OF THEIR APPRAISAL NOTICE MAY, UH, COME AT A LITTLE BIT LATER DATE, BUT THEY WOULD LIKE TO KNOW WHETHER THAT ABATEMENT IS IN EFFECT FOR THAT YEAR OR NOT, SO THAT THEY CAN PROVIDE A NOTICE OF APPRAISED VALUE THAT REFLECTS THAT ABATED ABATED AMOUNT.
UM, SO THERE'S SOME TIME AND CONSIDERATIONS THAT NEED TO BE MADE THERE AND, UH, I'M, I'M HAPPY TO ENTERTAIN ANY QUESTIONS THAT Y'ALL MIGHT HAVE.
THERE'S A LOT GOING ON WITH THAT, BUT DID YOU WANT ME TO TOUCH ON ANYTHING ELSE? NO, I DON'T THINK SO.
THERE'S JUST ONE PROJECT SPECIFIC SLIDE IF YOU WANTED TO WRAP UP.
WE CAN GO BACK TO THE Q AND A AFTER THIS.
BUT AGAIN, THE STRUCTURE THAT WE HAVE RIGHT NOW WITHOUT TIERING SPECIFICALLY IS PRETTY CLEAN, WHICH IS JUST TO SAY, LOOK, WE'RE NOT NOT GONNA SHARE MORE THAN 50%.
THAT'S NOT, THAT'S SOMETHING THEY ASK FOR.
UM, AND IN THE INDUSTRY, THAT NUMBER DOES TEND TO GET HIGHER IF YOU NEGOTIATE CASE BY CASE.
SO IF YOU'RE OUT THERE ARGUING WITH GOOGLE, FACEBOOK, JAMES, I THINK YOU WENT THROUGH THIS WITH FACEBOOK IS YEAH, 85% IS WHAT THEY WANTED.
SO WHAT WE WERE TRYING TO USE IS WHAT WE BELIEVE TO THESE SKY BOX'S SORT OF MARKETING PRESENCE AND POWER TO GET OUT, HAVE AN AGREEMENT BAKED INTO THEIR LEASE, AND AVOID THE HASSLE OF THE DIFFICULTY OF GOING CASE BY CASE.
UM, AND WE TRIED TO STRUCTURE IT INITIALLY SO THAT ALL OF THE BUSINESS PERSONAL PROPERTY WOULD ACCRUE BACK TO THE CLIENT CUZ THEY'RE THE ONES MAKING 90% OF THE INVESTMENTS.
SO WHOEVER GOES IN THERE, MEDIC, WHOEVER, UH, THEY'RE, THEY'RE THE ONES THAT ARE GETTING THE BENEFIT.
UM, THERE IS PROPERTY VALUE OF THE TURS, OBVIOUSLY THEY'RE GONNA BE BUILDING, UM, INFRASTRUCTURE OUT THERE THAT DOESN'T BELONG SPECIFICALLY TO ANY OF THE INDIVIDUAL TENANTS, NOT THE LEAST OF WHICH IS THE ENCORE SWITCH AND THE THINGS THAT ALSO THE SKY BOX BILLS TO TURN THAT POWER INTO USABLE POWER IN THE DATA CENTERS.
UM, AND THAT'LL, THAT WILL BE WHAT GOES ON THE PROPERTY TAX BOOKS FIRST.
BUT AS FAR AS HOW WE GET VALUE OUT OF IT TO USE INCENTIVES, IT WOULD FLOW THROUGH THE TOURISTS.
NOW, THEY'D LIKE TO TRADE WITH US A LITTLE BIT ON THAT, WE'LL TALK ABOUT IT LATER, MAY WANT TO, MAY NOT WANT TO, BUT, UM, THAT'S THE WAY THE THING HAS BEEN STRUCTURED AND THAT'S THE WAY WE PROPOSE TO KEEP IT STRUCTURED GOING FORWARD.
AND THE ONLY OTHER THING IS THAT, UH, AND WE'LL TALK ABOUT THIS LATER ON, IF YOU, YOU HAVE A 10 YEAR WINDOW TO BUILD, YOU HAVE X AMOUNT OF SQUARE FOOTAGE THAT YOU CAN BUILD BASED ON THE POWER ON THE SITE.
IF GOOGLE SHOWS UP IN YEAR SEVEN AS OPPOSED TO YEAR FOUR, YOU KNOW, DO WE WANT TO HAVE THE OPTION OF CONTINUING THAT PARTICULAR ABATEMENT FOR SOME PERIOD OF TIME IF IT'S A SIGNIFICANT AMOUNT.
SO AGAIN, WE'LL TALK ABOUT, BUT IF THEY DON'T BUILD THINGS WITHIN THE 10 YEAR ORIGINAL START DATE, THEY START BUILDING THINGS IN YEAR 12, WE HAVE TO START ALL OVER, ET CETERA.
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AND AGAIN, PROLO JUST BEING A BIG HUGE READ.I MEAN, THEY HAVE THE POWER TO SIT, BUT THEY DON'T PARTICULARLY WANT TO BECAUSE THIS IS A, A VERY DIFFERENT ASSET CLASS FOR THEM THAN WHAT THEY TYPICALLY BUILD.
SO, UH, RENTS ON THESE THINGS ARE GOING UP AS FAST AS VACANCIES ARE GOING DOWN.
SO IT'S CERTAINLY FINANCIALLY THEIR BEST INTEREST TO GO AHEAD AND GET PRODUCT ON THE GROUND AND GET THIS STUFF PERFORMING.
IT'S THE FINANCIAL WIZARD BEHIND THE LANDLORDS.
THE ONLY OTHER THING I WAS JUST GONNA SAY ABOUT THE COUNTY, THIS ALVINS IN DC THIS WEEK, BUT THE OTHER SIDE OF THE HOUSE THAT HELPED US MEASURABLY CUZ IT IS, IT IS A DIFFICULT CALCULATION AS WELL, IS HOW TO TAKE THE ORIGINAL 10 BILLION EQUIPMENT ESTIMATE, BREAK IT APART TO WHAT'S REAL, WHAT BELONGS TO WHICH CLIENT, WHICH BELONGS TO WHICH BUILDING.
UM, AND IT, IT TOOK US A COUPLE WEEKS JUST TO DO THAT CUZ IT'S NOT AN UNCOMPLICATED CALCULATION, FORTUNATELY, UM, NOT AS THE COUNTY HAVE PEOPLE TO DO THAT FOR A LIVING, BUT THEY'VE DONE IT IN THE DATA CENTER MARKET.
SO THEY HAVE A PRETTY GOOD IDEA THAT SERVERS DEPRECIATE AT, THEY HAVE A SCHEDULE FOR REINVESTMENT THEY COULD DO.
AND A QUESTION HAD COME UP ABOUT DEPRECIATION ON, ON, UH, EQUIPMENT AS TO WHY IT NEVER GOES TO ZERO.
UM, AND IT'S APPARENTLY THE PRIMARY DIFFERENCE IS THE DIFFERENCE BETWEEN HOW WE MIGHT LOOK AT DEPRECIATING A CAR FOR EXAMPLE, OR A PRINTER FOR A BUSINESS OR WHATEVER, UM, VERSUS A BUILDING WHICH HAS A LIFETIME ASSET THAT'S MUCH LONGER.
SO IN THE VALUATION SIDE OF THIS BUSINESS, UM, THERE'S A GROUP, I CAN'T REMEMBER THE NAME OF THE CONTRACTOR THAT ALL OF THE APPRAISAL DISTRICTS USE, BUT, UH, PARTICULARLY MAYBE MARSHALLS, CO MARSHALLS, BUT, AND THEY HAVE DONE EXHAUSTIVE RESEARCH ON THESE DIFFERENT BUILDING CLASSES AND HOW THINGS OVER TIME THEY, THEY NEVER GO TO ZERO BECAUSE THERE'S ALWAYS SOME VALUE IN THE PROPERTY, RIGHT? SO AS LONG AS IT'S BEING USED TO GENERATE INCOME YEAH.
FOR THE BUSINESS, IT, THERE'S VALUE THERE.
SO THERE'S A PRETTY ROBUST SET OF METRICS AROUND THAT IN THE BACKGROUND THAT IS USED BY THESE APPRAISAL FOLKS TO KIND OF PUT BOUNDS AROUND IT SO WE'RE NOT JUST SHOOTING IN THE DARK OR USING A METHODOLOGY THAT'S JUST BEEN CONCOCTED TO THAT PROJECT.
HUGE THREE, WHAT PERCENT DOES TO APPRECIATE EACH YEAR? UM, I HAVE TO GO BACK AND PULL UP ALL OF THAT SPECIFIC DATA, BUT IT DEPENDS ON WHICH OF THOSE PARTICULAR ITEMS. SO SERVERS, I DON'T THINK THEY EVER GO TO ZERO, BUT THEY GET REPLENISHED BECAUSE THEY GET WORN OUT.
UM, THERE'S STILL SOME MARKET VALUE TO THOSE IF A GUY, SO IF A GUY EQUIPPED DECEMBER 30TH, THEY NEED ALL THE EQUIPMENT IN AND IT WAS GONNA BE APPRAISED JANUARY 1ST, RIGHT? AND THEY PUT A BILLION DOLLARS IN THE NEXT YEAR, WHAT WOULD THE, WHAT WOULD THE VALUE ESTIMATED OF A TYPICAL BILLION DOLLAR SERVER? UM, I'M TRYING TO REMEMBER THOSE NUMBERS CLOSE.
I HAVE TO GIVE YOU, I'M TALKING TO JAMES ABOUT THIS CUZ IF YOU'VE GOT A $6 BILLION THING AND THAT'S LIKE, IF IT SAY LIKE 20% OF THE VALUE IS APPRECIATED, THEN WHAT? YOU HAVE 5 BILLION TODAY.
IF NOBODY REPLENISHES ANYTHING THE NEXT YEAR, THEN THAT MEANS IT WOULD DROP DOWN TO LIKE 3.75 BILLION.
WELL THE TAX ON THAT 1.25 BILLION IS SIGNIFICANT ENOUGH TO WHERE, I MEAN POTENTIALLY THAT COULD, THAT'S TWO, THREE 4 MILLION OR SOMETHING.
ALL OF A SUDDEN THE CITY THOUGHT THEY WERE GONNA GET, NOT GONNA GET.
AND WE DON'T FIND THAT OUT UNTIL MAY BECAUSE LIKE, I DON'T KNOW ABOUT WILLIAMSON COUNTY, BUT UM, YOU HAVE TO RENDER YOUR PROPERTY IN TRAVIS COUNTY BY APRIL 17TH, MY RECOLLECTION, SHOULD THERE BE THAT INFORMATION APRIL 17TH WE'RE WRITING A BUDGET AND THEN I CAN'T IMAGINE WRITING A BUDGET FINDING OUT TWO MONTHS LATER WE ACTUALLY GOT A $5 MILLION HOLE BECAUSE WE THOUGHT THEY WERE GONNA REPLENISH.
BUT THAT BRINGS UP TO MY QUESTION.
SO ONE OF THE THINGS WE'RE ASKING ABOUT, ABOUT THE, THIS IS ONLY LOOKING AT FOR BUSINESS PERSONAL PROPERTY, HOW DOES THAT GO INTO THE CALCULATION FOR THE
IF THERE'S ANY VALUE ON ANY PIECE OF PROPERTY AT ALL, IT GETS PUT INTO THE CALCULATIONS FOR THE NU REVENUE.
I DON'T, IT DOESN'T, I DON'T, I DON'T, I DON'T DETERMINE, I DON'T NEED TO DETERMINE WHERE IT COMES FROM, WHAT KIND OF VALUE IT IS.
IF IT'S A DOLLAR ON A PROPERTY, IT GOES INTO THE CALCULATIONS FOR, FOR THE NO REVENUE, BUT IT DOESN'T GO IN AS LIKE THE, LIKE BEFORE YOU HAVE THE RATE AND YOU SUBTRACT THE SALES TAX OUT FIRST AND THEN GIVE IT PROPERTY.
SO DOES IT JUST FOLLOWED INTO THE PROPERTY TAX RATE VALUE YOU SET FROM, SAY THAT AGAIN NOW BECAUSE YOU KNOW, IN THE FORMULA, LIKE YOUR SALES TAX RATE DOPE, LIKE YOU GOT TWICE THE AMOUNT OF MONEY MM-HMM.
[00:25:01]
PROPERTY TAX THAT YOU TO BE GENERATED TO GET YOUR SAME NEW, NEW REVENUE RATE.SO IT COMES UNDER, NOT UNDER THE SALES TAX SUBTRACTION SIDE, BUT IT'S UNDER THE PROPERTY JUST LIKE A REGULAR PROPERTY TAX.
IT'S JUST BUSINESS PROPERTY, BUT IT'S STILL CONSIDERS A PROPERTY TAX.
IF IT GOES UP IN VALUE, IT PUSHES THE RIGHT DATA, RIGHT? YEAH.
IT DROPS IN VALUE TYPICALLY JUST RATE, YEAH.
THAT'S THE, THAT'S, THAT'S INVERSE RELATIONSHIP.
AS, AS VALUES GO UP, RATES GO DOWN TYPICALLY, UM, CONCERNING THE NO NEW REVENUE RATE SPECIFICALLY, WHICH TRIGGERS THE VOTER APPROVED RATE AND YOU THE VOTER ON THE VOTER APPROVAL RATE, WHAT WE DO IS WE KIND OF WIPE THE SLATE CLAIM AND START THE CALCULATION ALL OVER AGAIN.
SO YOUR NO NEW REVENUE RATE BASICALLY TELLS, TELLS US OR TELLS YOU THIS IS THE RATE THAT YOU WOULD NEED TO ADOPT TO GET THE SAME AMOUNT OF REVENUE THAT YOU GOT LAST YEAR ON PROPERTIES THAT WERE TAXED LAST YEAR.
SO, UM, UH, IT DOESN'T TAKE INTO ACCOUNT THE NEW, THE NEW VALUE THAT THAT WAS ADDED TO THE ROLE FROM NEW IMPROVEMENTS.
UM, IN, IN THAT CURRENT YEAR FOR YOUR VOTER APPROVAL RATE, WE FIGURE OUT WHAT IS YOUR NO NEW REVENUE RATE FOR SPECIFICALLY JUST MAINTENANCE AND OPERATIONS.
WE MULTIPLY THAT TIMES THREE AND A HALF PERCENT.
SO YOU GET, THERE'S YOUR THREE AND A HALF PERCENT INCREASE ON JUST YOUR MAINTENANCE AND OPERATIONS REVENUE.
UM, AND THEN AT YOUR DEBT RATE TO THAT TO GET YOUR VOTER APPROVAL RATE.
SO, SO THAT'S BEEN MY CONCERN WITH AND TALKING TO JANE DOES THAT, IF THIS DOES SWING UP AND DOWN BY A BILLION DOLLARS, LET'S SAY, WELL THEN POTENTIALLY THE M AND O RATE IS GETTING, IS SWINGING WITH THAT, RIGHT? BECAUSE IF YOU HAVE 5 BILLION AND NOW THIS YEAR THEY SAY, WELL, WE DEPRECIATE 25% IT'S WORTH 3.5, WELL THEN THE RATE AUTOMATICALLY IS DROPPING DOWN THE MOST THAT WE CAN HAVE A VOTER APPROVED ONLY GOES DOWN, GOES UP IF, IF THE VALUE GOES DOWN.
BUT ON THE FLIP SIDE THEN IT WORKS INVERSELY THEY DO THAT INITIAL INVESTMENT, THE RATE PLUMMETS AND GOES BELOW PLUMMET 5% AND SMALLER.
AND SO EVERY TIME THERE'S A REFRESH IT, THE RATES ARE DROPPING AND EVERY TIME THEY'RE NOT REFRESHING IT'S SQUAT AND YOU HOPE THAT IT'S SPREAD OUT AND IT'S AN EVEN THING, BUT IT MAY NOT BE THAT INTEREST, RIGHT? YEAH.
WELL THE, THE PERCENTAGES IN THE WAY WE CALCULATE 'EM ARE YEAR TO YEAR.
WE'RE PRETTY MINOR IN TERMS OF CHANGES BECAUSE THE EQUIPMENT ISN'T FALLING OUT OF VALUE FAST AND THEY'RE BRINGING NEW STUFF IN BECAUSE THEY BASICALLY HAVE A NEW TECHNOLOGY WHERE THEY HAVE THE NEED TO GO FASTER WITH THEIR COMPUTING.
SO THEY'RE BUYING HIGHER GRADE EQUIPMENT AND I MEAN WE CAN SHARE THAT WITH YOU.
I MEAN THE, I'M SURE WITH THE COUNCIL MADE 50% TOO, SO THAT'S ALSO REDUCING THE SWING BY HALF THE AMOUNT.
SO HERE'S WHAT I'LL SAY ABOUT WHAT, WHAT BOB JUST SAID.
THAT'S THE WAY THAT IT'S MODELED, IT'S MODELED VERY, FOR THE MOST PART FAIRLY EVEN.
BUT IN REALITY WE CAN'T ANTICIPATE AND EXPECT THAT IT WILL DELIVER IN THE WAY THAT IT'S MODELED BECAUSE ALL IT TAKES IS YOU TO GET OFF ONE YEAR, WELL WE DIDN'T DO OUR REFRESH THIS YEAR AND WE DIDN'T START THAT BUILDING THIS YEAR.
WE'RE GONNA WAIT A YEAR AND THEN SUDDENLY THAT YEAR YOUR VALUE IS JUST LIKE THIS.
AND THEN NEXT YEAR, THEN THEY'RE LIKE, OH, WELL WE DID DO IT.
AND THEY CATCH UP AND NOW THE VALUE WENT LIKE THAT.
SO IT, WE MAY HAVE MODELED BUILDING A WAREHOUSE.
IT DID BUILT ALL THESE WAREHOUSES.
THEY WERE SHORT ON WAREHOUSES, BUILD, BUILD, BUILD.
AND THEN THEY WOKE UP ONE DAY AND THEY SAID, THINK WE OVERBUILT ON WAREHOUSES.
SO NOW OF A SUDDEN LAYOFFS AND NOW THEY'RE SUBLEASING.
AND SO I COULD SEE THE SAME THING HAPPENING WHEN YOU'RE, WHEN YOUR OCCUPANCY RATES ARE THAT LOW THAN WHAT'S EVERYBODY SAY, WE NEED MORE AND MORE AND MORE.
BUT AT SOME POINT EVERY, EVERYTHING CORRECTS.
AND SO WHEN IT CORRECTS, I'VE BEEN TELLING JAMES, I JUST WANNA MAKE SURE WHATEVER WE DO, WE MAKE IT AS LEVEL AS POSSIBLE SO THAT YOU DON'T WAKE UP ONE DAY AND GO, WOW, THERE'S A GLUT IN SERVER CAPACITY.
UM, WHAT DO WE DO? CUZ WE'RE NOT TALKING LIKE A $30,000 THING HERE.
WE'RE TALKING, I MEAN, MILLIONS TO WHERE IN ONE YEAR I THINK IT WAS LIKE 15 OR 20 MILLION, YOU COULD TALK A MASSIVE REDUCTION IN STAFF IF YOU, IF YOU STAFF WRONG.
UM, YEAH, I MEAN I THINK THAT'S A DIFFERENT CONVERSATION PROBABLY FOR US, YOU KNOW, ON, ON STRATEGY, ON HOW WE BUDGET AND IT'S THE, IT'S THE BUSINESS PERSONAL PROPERTY THAT'S THE ISSUE.
BECAUSE GENERALLY SPEAKING, REAL PROPERTY MOSTLY JUST CONSTANTLY SLOWLY INCREASES IN VALUE OVER TIME.
AND AS THIS PROJECT BECOMES A SMALLER PIECE OF YOUR PIE OF YOUR TOTAL VALUE, THAT THAT'LL ALSO, BUT THAT'S ALSO PART OF THE PROBLEM IS THAT THEY'RE LOOKING AT RAMPING UP ACCORDING TO THEIR MODEL SO QUICKLY THAT THEY BECOME HALF OR, OR WE BECOME HALF OF THE VALUE OF THE, OF THE CITY.
EVERYTHING OTHER THAN THAT ONE TAXPAYER.
THAT'S WHEN THAT BECOMES AN ISSUE.
AND YOU CAN, YOU KNOW, YOU CAN TALK TO, THERE ARE SOME, THERE ARE SOME PRETTY GOOD EXAMPLES OF NUMBER ONE, THE FLUCTUATIONS IN, IN THE VALUE.
[00:30:01]
CITY OR TAX SCHOOL DISTRICT THAT ISN'T A, THAT HAS MINERAL INTERESTS MM-HMM.UM, YOU KNOW, WHAT THAT DOES IS IT DOES WREAK HAVOC ON A PERSON WHO OWNS A HOME WHOSE VALUES STEADILY, YOU KNOW, JUST CREEPING ALONG WITH THE MARKET.
UM, AND WE'RE TALKING, YOU KNOW, MOST OF THESE PLACES, MIDLAND AND, AND ODESSA AND PLACES OF, UH, IN THE EAGLE FOR CHAIR, EAGLE, EAGLEFORD, CHAIR SHALE SHELL, SORRY, THAT'S ALL, UM, IN, IN THOSE AREAS WHERE, UH, A COUNTY OF 5,000 PEOPLE AND THAT IS THE, THE MAJORITY OF THEIR VALUE IS IN MINERAL INTEREST.
AND THAT STUFF IS FLUCTUATING WITH THE OIL MARKET.
UM, THAT, THAT YOU DO SEE SOME IMPACTS ON THERE.
UH, IN MILAM COUNTY, IF ANYBODY KNOWS ANYBODY IN MILAM COUNTY, I'D PICK UP THE PHONE AND TALK TO THEM.
UM, THEY LOST, UM, OA, IT WAS 30% OF THEIR TAX ROLE FOR THE COUNTY MM-HMM.
UM, AND, AND WHEN THEY SHUT DOWN THAT, UH, REED HAVOC ON ON THAT COUNTY, UM, AS WELL AS SOME OTHER TAXING JURISDICTIONS, THAT MIGHT BE A GOOD CASE STUDY TO SEE WHAT HAPPENED.
SO, SO AS A MANAGER, THE WAY I WOULD APPROACH THAT, GENERALLY SPEAKING IS I WOULD BUDGET THE DOLLARS THAT ARE PROJECTED TO COME IN FROM THAT SOURCE FOR CAPITAL ITEMS ONE-TIME EXPENDITURES, THINGS THAT AREN'T TYPICALLY RECURRING EXPENDITURES.
THAT'S NOT TO SAY THAT YOU COULDN'T SAY, WELL, WE'LL ISSUE DEBT AND USE SOME OF THAT TO PAY, YOU KNOW, SOME OF THAT VALUE TO BUY DOWN WHAT WE'RE ACTUALLY GONNA HAVE TO GO OUT TO DEBT FOR OR ANYTHING LIKE THAT.
BUT THAT, THAT'S HOW I WOULD MANAGE THAT AS A MANAGER IS I WOULD NOT LOOK TO, TO BUDGET RECURRING EXPENDITURES FROM A REVENUE SOURCE THAT IS HIGHLY FLUCTUATING JUST BECAUSE THAT IS HOW YOU CAN, WELL YOU WOULD KNOW IF YOU, IF YOU ATE UP THAT THOSE BUDGET DOLLARS ON STAFF WHO HAVE TO GET PAID EVERY YEAR, RIGHT.
BECAUSE THEY'RE A, AN ONGOING EXPENSE, THEN WHENEVER THAT NUMBER DROPS, THEN YOU'RE IN, YOU'RE IN TROUBLE AND YOU'RE HAVING TO LAY OFF, THEN YOU'RE HIRING AND YOU'RE LAYING OFF AND YOU'RE HIRING, YOU'RE LAYING OFF.
AND THAT'S NOT A GOOD LOOK FOR ANYBODY.
SO LIKE WE TALKED, YOU CAN, I TOLD JAMES, BUT ONLY FEAR WHAT THAT IS, IS THAT WE THINK ALL THESE ONE TIME THINGS, BUT THEN WE DON'T, WE DON'T BUDGET SIDEWALKS IN OUR BUDGET ANYMORE, RIGHT? WE SAY, WELL WE'RE NOT GONNA SPEND ON M AND O, WE'RE GONNA USE IT FOR THIS MONEY.
AND THAT'S A ONE TIME EXPENSE.
AND SO THEN WE END UP HIRING MORE PEOPLE AND SO THEN WE END UP PUSHING ALL THE ONE TIME ITEMS OFF OF OUR GENERAL REVENUE AND WE MOVE IT TO THIS ONE TIME FUND, LET'S CALL IT.
BUT THEN WHEN IT GOES AWAY, WE'VE DONE THE EXACT OP, WE'VE, OVER TIME WE'VE DONE THE SAME THING WE'VE TRIED NOT TO DO, IS WE NOW HAVE ALL OF OUR ONE-TIME SIDEWALKS AND PARKS AND ALL THESE THINGS AND THIS FUND, AND NOW WE'RE REALLY STAFF HEAVY AND WE HAVE TO DO THE SAME THING.
SO WE ALSO INCREASE OUR CASH RESERVE REQUIREMENT POLICY BASED ON THIS ONCE THIS COMES ONLINE.
THAT WOULD BE ANOTHER WAY YOU COULD MITIGATE BETWEEN YEAH, YOU COULD, YOU COULD DO THAT TOO.
BUT I, I THINK TO, TO YOUR POINT MAYOR, THE LIKE BUILDING SIDEWALKS, THAT'S NOT A ONE-TIME EXPENSE.
SO THAT'S SOMETHING THAT NEEDS TO STAY OVER ON THE M AND O SIDE.
BUILDING A POLICE DEPARTMENT, THAT'S A ONE-TIME EXPENSE.
YOU GO, YOU GO BUILD THAT, YOU KNOW, BUILDING A FACILITY OR EXPANDING A WASTEWATER TREATMENT PLANT, THOSE TYPES OF THINGS, THOSE ARE ONE-TIME EXPENSES.
BUYING EQUIPMENT THAT'S A ONE-TIME EXPENSE BECAUSE THAT'S NOT A RECURRING EXPENSE.
THAT'S OUR UNDERSTANDING TODAY.
YEAH, BUT YOU, I MEAN YOU NO, I HEAR YOU.
SO COUNCIL'S ALL OF A SUDDEN SEEING LIKE OHS 35 MILLION OVER THERE, LET'S DO THIS.
SO, SO WHAT I WAS TRYING TO DO WAS, WE, WE HAD THIS CONVERSATION BEFORE AND I'M TRYING TO FIND A WAY, I DON'T KNOW A BETTER WAY TO PUT IT THAN OTHER WAY, OTHER WAY THAN SAYING JUST TRYING TO FIGURE OUT HOW DO YOU, HOW DO YOU GET AS MUCH MONEY AS YOU CAN OUT OF THE SYSTEM AND GET IT INTO A MANNER TO WHERE WE CAN BUILD INFRASTRUCTURE, WE CAN DO ALL THESE PROJECTS, BUT IT'S NOT, IT'S ALL BEING DONE.
AND, AND ONE OF THE QUESTIONS WE HAD, JAMES, I COULDN'T REMEMBER THE ANSWER WAS LIKE, IS BUSINESS PERSONAL PROPERTY IS, IS THAT TAX MONEY SOMETHING THAT YOU CAN USE IN ATTORNEYS ALSO? I THINK WE'VE DETERMINED THAT IT DOESN'T ONLY REAL PROPERTY IS A ONLY LITTLE PROPERTY.
SO, BUT WHAT, BUT WHAT YOU MIGHT TO DO, SO LARRY, THIS IS A QUESTION, DO YOU KNOW, DO YOU KNOW, BECAUSE WE'VE MADE ASSUMPTIONS BEFORE.
AND SO, AND, AND I'M GONNA SAY I DON'T KNOW BECAUSE I'M NOT INVOLVED IN THOSE AGREEMENTS AND THE COUNTY HAS, HAS NEVER WRITTEN A JURORS, UM, ONLY THEY PARTICIPATE IN TURS, BUT ONLY IN ONES THAT OTHER CITIES HAVE HAVE CREATED.
BUT FROM MY KNOWLEDGE, THE APPRAISAL DISTRICT IS GOING, YOU'RE GONNA TELL THE APPRAISAL DISTRICT WHAT THE JURISDICTION OF THE TURS IS.
IT'S, IT LOOKS LIKE THIS AND IT INCLUDES ALL OF THESE PROPERTIES IN THERE.
UM, AND THEN YOU'RE GONNA SAY, THIS
[00:35:01]
IS THE BASE HERE FOR THAT TURS.AND THEN WE'RE GONNA CAPTURE VALUE, MEANING THE INCREMENTAL VALUE IN EACH YEAR IN THAT TURS.
AND WE'RE GOING TO FUND THE TURS WITH THE INCREMENTAL VALUE OR THE TAXES THAT COME FROM THAT INCREMENTAL VALUE.
OKAY? I'VE NEVER BEEN ASKED TO RUN A REPORT TO SHOW, SHOW ME WHAT TAXES ARE HAVE COME FROM REAL PROPERTY AND WHAT TAXES HAVE COME FROM BUSINESS PERSONAL PROPERTY.
NOT EVEN, NOT EVEN THAT BECAUSE USUALLY WHAT'S HAPPENED, IT'S THE BEAN COUNTERS FOR THE CITY ARE SITTING THERE GOING, HERE'S THE VALUE OF THE BASE HERE, HERE'S THE, THE VALUE THIS YEAR, THE INCREMENTAL VALUE IS THIS MUCH.
AND, AND, UM, THEY DO THE MATH ON WHATEVER THE, THE FUND, UM, FUNDING AGREEMENT IS INTO THE TURS.
AND THAT'S THE AMOUNT OF MONEY THAT THEY MOVE OVER WHO GIVES US THE 100% DEFINITIVE.
NOW WHETHER THEY'RE ASKING HAVE TO, THEY MIGHT BE ASKING THE APPRAISAL DISTRICT HOW MUCH VALUE IS IN V PPP AND HOW MUCH VALUE IS IN REAL.
BUT, UH, I I, WE OFTEN GET MY OFFICE OFTEN GETS ASKED QUESTIONS, UM, THAT ARE, SHOULD BE DIRECTED TO THE APPRAISAL DISTRICT.
I'VE NEVER BEEN ASKED THAT QUESTION BEFORE.
NO OFFENSE, TEXAS CRIME CONTROL REAL PROPERTY ONLY, REAL PROPERTY ONLY TEXAS COMP CONTROL.
YEAH, MY GUESS IS THOUGH, I DON'T KNOW OF ANYBODY THAT'S THAT'S, UH, FILTERING OUT AND THAT WOULDN'T FIX THE VARIATION OF THE TAX TRADING ANYWAY PART.
NO, BECAUSE THE TUR TAKES THE, LET'S SAY IT WAS THEN THE TUR TAKES ALL THAT VALUE OUT OF THE, OUT OF THE WHOLE FORMULA TOO.
AND SO THEN ONE, YOU PUT A HUNDRED PERCENT OF IT IN THERE, RIGHT? BUT THAT'S WHAT I WAS TELLING YOU.
IF THIS IS, IF PERSONAL PROPERTY COULD BE IN 50% ABATEMENT, IF YOU SAID, HEY, WE'RE GONNA GO BUILD A 40 MILLION BRIDGE AND DO THIS AND THIS AND THIS, AND SO WE'RE GONNA PUT THE OTHER 50% INTO THAT, THEN IT SMOOTHS OUT AND WE'RE GONNA BE BUILDING THIS STUFF ANYWAY.
I MEAN YOU WOULDN'T WANNA WASTE THE MONEY, BUT IF YOU'RE GONNA BUILD IT ANYWAY.
THE OTHER THING THAT I WAS CURIOUS ABOUT, AND SO I'VE ONLY DEALT WITH PAYMENT IN LIEU OF TAXES FOR LIKE TAX CREDIT FACILITIES THAT ARE NOT, THEY DON'T PAY TAXES, SO THEY JUST CUT A CHECK INSTEAD.
AND LARRY, I SEE THAT YOU'RE TOPPING, SO THIS QUESTION'S GONNA BE TARGETED TOWARDS YOU.
SO I UM, IF, IF WE WERE TO SAY RAISE THE ABATEMENT LEVEL SO WE DON'T COLLECT THE TAX IN THE FIRST PLACE, BUT WE HAVE A SO ASIDE ECONOMIC DEVELOPMENT AGREEMENT WHERE THEY AGREE TO JUST MAKE A DIRECT CONTRIBUTION TO THE CITY DONATION, WHATEVER MM-HMM.
OKAY, WHAT YOU SAY? WOULD THAT BE A PAYMENT TAXES, THE SPONSOR BUILDING OF 45 MILLION BRIDGE? AND WE SAID, WE'LL MAKE YOUR TAXES 75% FOR 10 YEARS AND YOU AGREE TO SPONSOR BUILDING A 40 MILLION BRIDGE.
AND SO THEN THEY GO OUT AND BUILD THE BRIDGE AND THE MONEY, ALL SOMEONE FIGURES OUT ALL WASHED US THROUGH WHERE IN 10 YEARS WE ESSENTIALLY GAVE THEM 50% AND THEY IN REALITY BUILT THE BRIDGE AND THE MONEY'S THE SAME.
WELL, I'M THINKING ABOUT IT DIFFERENTLY IN THE SENSE THAT WHAT, WHAT WE MIGHT COULD DO IS IS TO FIX THE, THE UPS AND DOWNS IS TO SET THEIR AMOUNT THAT WE WILL TAX AT A CERTAIN DOLLAR AMOUNT AND THEN ANYTHING OVER THAT WE WILL OBEY.
SO THAT WAY YOU'RE ALWAYS AT A BASELINE FOR THE MOST PART.
MAYBE IT'S A BASELINE PLUS 3% OR WHATEVER YOU WANT, BUT YOU'RE AT A BASELINE.
THAT'S WHAT, THAT'S WHAT WE'LL COLLECT ON AND THEN WE'LL ABATE EVERYTHING ABOVE THAT AND IT GOES UP AND DOWN, UP AND DOWN, UP AND DOWN, UP AND DOWN.
BUT THEN OF THAT, WHATEVER THE PERCENTAGE IS, UM, IF IT'S, IF YOU GO OVER THAT, THEN YOU CUT US A CHECK FOR THE DIFFERENCE AS A ECONOMIC DEVELOPMENT, YOU KNOW, AGREEMENT.
AND THEN THAT WAY WE'RE STILL GETTING THE, THE AMOUNT THAT'S DUE US, IF YOU WILL, BUT WE'RE KIND OF LOCKING IN A STABLE, A STABLE COLLECTION AMOUNT.
SO I DON'T KNOW, IT'S JUST THAT'S SMART BECAUSE THEY'RE NOT A LESS VAN BECAUSE I DON'T KNOW HOW EVERYBODY DOES A RENDITIONS.
MY GUESS IS THEY'RE NOT DOING IT COMPLETELY LIKE THEY SHOULD BE.
RIGHT? IT'S LIKE REPORTING INCOME.
IF YOU DIDN'T GET A, A 10 99, YOU PROBABLY AREN'T ALWAYS REPORTING CASH INCOME.
I HAVE NO IDEA WHAT YOU'RE TALKING ABOUT
SO I WONDER LIKE WHEN SOMEONE HAS 3 BILLION IN PROPERTY, IS THERE SOMEONE LIKE, WELL IT'S REALLY LIKE 2.8 AND SO WHAT, WHAT YOU'RE SUGGESTING, WE ALMOST SAW THAT IN A WAY TO SOME EXTENT BECAUSE
[00:40:01]
IF THEY CHEAT, THEY'RE JUST GETTING LESS BECAUSE WE'RE GETTING A STEADY AMOUNT.AND SO THEN THEY, WHOEVER THE COMPANY IS, WOULD BE MORE CONSISTENT IN THEIR REPORTING BECAUSE I MEAN, YOU ONLY NEED ONE, ONE ACCOUNTANT THAT WANTS TO TOW THE LINE AND THEN ALL OF A SUDDEN OUR REVENUES GO DOWN AND THEY'RE JUST MAKING MORE BENEFITS CONSISTENT.
I JUST DON'T, I MEAN IT, IT'S A GOOD IDEA IN THEORY, I JUST DON'T KNOW EXACTLY HOW TO DELIVER IT BECAUSE THE ONLY WAY TO REALLY DO IT THAT WAY IS TO SET A FIXED DOLLAR AMOUNT.
AND WHENEVER YOU DO THAT, YOU ALWAYS TAKE THE RISK OF THEM GAMING THE SYSTEM SOMEHOW SOME WAY AND BEING LIKE, OH, WELL YOU'RE GONNA TAX US AT, YOU KNOW, A HUNDRED, YOU KNOW, WHATEVER, 1 BILLION, THEN WE'RE GONNA MAKE SURE THAT WE DEPRECIATE OURSELVES DOWN BELOW THAT NUMBER AND THEN THEY'RE NEVER UP HERE IN THE TOP PART.
AND THAT DOESN'T MATTER TO THEM BECAUSE, AND ON THEIR SIDE OF THE LEDGER, THEY'RE STILL COLLECTING AND KEEPING ALL THAT MONEY.
SO I, I DON'T REALLY KNOW HOW TO DELIVER IT YET, BUT IDEALLY THAT WOULD BE THE, THE WAY TO SOLVE THE, THE HIGH VOLATILITY THERE.
ANY OTHER WAY TO TAKE PERSONAL COPY VALUE OFF THE BOOKS OUTSIDE OF THREE 12? NOT THAT I'M AWARE OF.
I MEAN AN EXEMPTION OR ABATEMENT AND, AND THERE IS NO EXEMPTION FOR FOR B P P OTHER THAN THE, YOU KNOW, THEY, THEY, IF YOU'RE LESS THAN $2,500, UM, UH, SO IN THIS SCENARIO, NO, THERE'S NOTHING THAT CAN BE CREATED THAT I'M AWARE OF.
SO DO THEY COLLECT, LIKE THEY TURN IN B PPP IN REAL AT THE SAME TIME? OR THOSE TWO SEPARATE THE ONLY RENDER, UH, BUSINESS PERSONAL PROPERTY, BUT IS IT SEPARATE FROM REAL PROPERTY? SO WHENEVER ESSENTIALLY I'M ASKING ARE, DO YOU END UP DOING TWO ABATEMENTS IF BPPS INCLUDED, DO YOU DO THE ABATEMENT 50% FOR B PPP AND THEN 50% FROM THE REAL OR IS IT ADDED TOGETHER? YOU CAN DO THAT? NO.
THERE'S ACTUALLY TWO ACCOUNTS THAT ARE CREATED.
ONE FOR THE REAL PROPERTY AND ONE FOR THE B PPP, UH, PROPERTY.
SO THEY'LL GET TWO TAX BILLS, ONE FOR REAL, ONE FOR B PPP.
SO YEAH, MY ADVICE WOULD BE ON THE REAL PROPERTY, SINCE WE KNOW THAT'S GOING INTO THE TURS, WE DON'T ABATE THAT ONE EFFECTIVELY.
IT'S MINUSCULE COMPARED TO THE, TO THE BPP FROM THIS PARTICULAR PROJECT.
SO THAT'S WHERE WE REALLY FOCUS OUR TIME.
AND I CAN'T IMAGINE THAT THIS, LIKE WHENEVER WE WERE DOING LIKE FREEPORT AND YOU KNOW, TRIPLE FREEPORT AND ALL THOSE OTHER TYPES OF THINGS, I MEAN THAT'S FOR INVENTORY, SO I CAN'T IMAGINE THAT THERE'S NOT SOME WAY TO DO, YOU KNOW, SOMETHING MORE CREATIVE ON, ON THE B PPP SIDE.
UM, BUT ANYWAY, I I REALLY THINK THAT IT, YOU PROBABLY END UP WITH SOMETHING THAT LOOKS LIKE, HEY SKYBOX, WHENEVER YOU BUY A A SERVER AND YOU DO YOUR REFIT AND YOU COME TO US AND SAY, HEY, THAT'S 500 MILLION.
THEN WE'RE SAYING, OKAY, 25% OF THAT WE'RE GONNA TAX, THAT'S GONNA BE THE BASE TAX WE'RE ALWAYS GONNA TAX.
IT'LL BE 25% OF THAT PLUS 3% A YEAR FOR FOREVER.
AND THEN EVERYTHING ABOVE THAT WE'RE GONNA GIVE YOU, YOU KNOW, 70% BACK OR WHATEVER IT NEEDS TO BE TO BE 50% WHENEVER YOU DO THE MATH.
SO WE'LL GIVE YOU 70% BACK FOR EVERYTHING OVER THAT.
AND THEN THAT WAY AS THAT MONEY.
AND THEN ANYTHING THAT IS ABOVE THAT THAT YOU STILL OWE US, YOU JUST CUT US A CHECK FOR AND WE DON'T TAX IT.
THIS PART, THE NOTES I HAD WAS WE NEED BOUGHT US EQUIPMENT.
I THINK IT OUGHT TO BE AN AGREEMENT THAT IT HAS TO BE, I DON'T KNOW WHAT THE TERMINOLOGY IS, BUT IT'S GOTTA BE LIKE A SOURCE OR BASED OR WHATEVER IT IS IN
I DON'T KNOW THAT WE CAN, I MEAN THEY WEREN'T UNWILLING TO DO IT, UH, A SEGREGATED CONTRACT FOR BUILDING AND THAT SORT OF THING.
SO THEY MAY NOT BE UNWILLING TO TRY THIS EITHER.
IT JUST IS, YOU KNOW, IT'S, IT'S PAPERWORK FOR THEM.
CAUSE OTHERWISE THEY'RE GONNA GO, THEY'RE GONNA GET THE TAX BENEFITS SOMEWHERE BECAUSE NO ONE'S BUYING A BILLION DOLLARS IN STUFF AND NOT, WELL WOULDN'T IT BE AT THE, WOULDN'T IT BE AT THE ACTUAL LIKE WAREHOUSE WHERE THE POINT OF SALE OCCURRED? WE MOVED ALL THAT AROUND.
WE NEED TO BUILD A WAREHOUSE TO COLLECT FOR THAT.
THE SERVERS MOVED HERE FOR THE LAST SL.
I'M SURE WE CAN, I'M SURE THE EDC COULD COME UP WITH A SPEC BUILDING, WE COULD BUILD OUT ON THE NEXT SPEC.
YOU KNOW, TAYLOR'S DOING THAT WITH, UH, WITH SAMSUNG AND THEIR, THEIR TAX REVENUES ARE LIKE OVER A HUNDRED PERCENT UP.
OKAY, WELL LET'S, LET'S TACKLE IT AND SEE IF WE CAN FIGURE OUT HOW TO DO IT.
IF THEY DON'T CURRENTLY HAVE A UM, UH, A LOCATION IN TEXAS, IF THEY'RE OUTSIDE OF TEXAS, THEN YOU CAN COLLECT THE TAXES FROM OUTSIDE AT YOUR AT SOURCE AT THE POINT THEN AS LONG AS IT'S OUTSIDE AND THEY DON'T HAVE A PRESENCE IN TEXAS, YOU CAN DO THAT.
THEY'RE PROBABLY PRESENCE IN TEXAS.
SO NO DELL SERVERS AND HIS TEXAS.
[00:45:02]
SO WHATEVER COMPANY DOES NOT HAVE A PRESENCE IN TEXAS, THEY GOT SMART PEOPLE, THEY'LL BE ABLE TO FIGURE THAT OUT.AND I HAD, UH, SO I AM BOB'S NOT AS NERVOUS.
I AM NERVOUS THAT IN 10 YEARS THEY WALK UP AND SAY WE NEED TO RENEW THE AGREEMENT OR WE'RE LEAVING MM-HMM.
BECAUSE IF YOU'RE GETTING READY TO GO BUILD A $5 BILLION SITE SOMEWHERE, YOU CAN GET ANOTHER ENCORE SUBSTATION SOMEWHERE ELSE AS SOON AS THEIR AGREEMENT WITH ENCORE AND THEIR CONTRACTS OUT.
AND SO I JUST THINK WE OUGHT TO JUST IN OUR MINDS REALIZE THAT THIS IS PROBABLY LIKE A FOREVER DEAL.
LIKE, SO THE, AN ABATEMENT CAN ONLY BE APPLIED ACCORDING TO THE APPRAISAL DISTRICT CAN ONLY BE APPLIED TO NEW IMPROVEMENTS OR NEW V PPP THAT'S COMING ON.
RIGHT? SO YOU CAN'T NOW THEN IN YOUR 11 ENTER INTO AN ABATEMENT FOR, BECAUSE ABATEMENTS ARE, ARE MAXED AT 10 YEARS.
YOU CAN'T NOW ENTER INTO AN ABATEMENT ON, UM, BUILDING PROPERTY THAT ALREADY EXISTS ON THE SERVERS BECAUSE THE SERVERS, YEAH, IF YOU, IF IF YOU DO WRITE AN AGREEMENT THAT SAYS FOR EVERY NEW SERVER THAT YOU BRING IN, WE'RE GONNA AB BAIT THE VALUE OF THAT SERVER FOR 10 YEARS.
YOU MAY HAVE 20 SERVERS IN THE BUILDING AND EACH ONE OF THEM HAS THEIR OWN ABATEMENT AGREEMENT.
I DON'T KNOW THAT I WANT TO FRAGMENT IT UP THAT MUCH, BUT I DO WANT TO FRAGMENT IT.
THAT WOULD DEFINITELY TAKE CARE OF THE UP AND DOWN THING BECAUSE YOU'D HAVE SO MANY OF IT.
SO THEY ARE, THE DISTRICT'S GONNA KILL ME FOR SAYING THIS CAUSE THEY ABSOLUTELY HATE IT, BUT THAT'S WHAT THEY'RE DOING FOR SAMSUNG.
SO FOR EVERY BILLION DOLLAR PIECE OF EQUIPMENT THAT COMES IN, THERE'S AN ABATEMENT FOR THAT PARTICULAR PIECE OF EQUIPMENT.
WELL, SO THAT'S WHAT I WAS THINKING IS, IS WE WOULD, WE WOULD STRUCTURE IT AND WE'RE OUT OF TIME, BUT WE WOULD STRUCTURE IT IN SUCH A WAY THAT WHENEVER THEY DO THEIR REFRESH, THAT'S A SIGNIFICANT REINVESTMENT THAT THEN IN TURN WOULD BE A NEW 10 YEAR AGREEMENT.
AND EFFECTIVELY THE EQUIPMENT THAT THEY REFRESHED, THEY REPLACED THE OLD EQUIPMENT.
SO THE OLD EQUIPMENT DOESN'T NEED, IT'S CONTINUED 10 YEARS AND THEN WHAT THAT DOES IS IT FRACTURES UP THIS THIS DEAL TO WHERE INSTEAD OF THE 5 BILLION DEAL DEAL COMING DUE IN 10 YEARS NOW YOU'VE GOT PIECES OF IT COMING DUE POTENTIALLY.
UM, NEVER BECAUSE IT SHOULD JUST CONTINUE MOVING INTO THE FUTURE, INTO PERPETUITY.
THE BUILDING IS THE ONLY THING THAT ULTIMATELY WOULD, WOULD RUN OUT OF TIME.
BUT COMPARE IT TO THE OTHER, THE BUILDING IS SMALL.
I KNOW WE'RE SAYING LOOK, WHEN DID A HUNDRED MILLION NOT BECOME NOT MUCH.
BUT WHEN YOU'RE TALKING TO, WHEN YOU'RE TALKING TO MAGNITUDES OF BILLIONS OF DOLLARS.
BUT YEAH, THIS IS NOTED MYSELF, ETHOSES IN 10 YEARS, ACADEMY'S OVER IN 10 YEARS, I DON'T SEE THIS EVER BEING OVER.
NO, NOT FOR THIS TOPIC OF YOU DID GET TO AGREE TO JUST 10 YEARS FLAT AND THAT'S IT.
THEN AS GOD AS MY WITNESS ON YEAR NINE, THEY'RE COMING IN GOING, HEY, WE NEED, WE NEED SOMETHING.
OTHERWISE WE'RE GONNA THINK THAT'S GONNA REQUIRE A SUBSTATION TO BE BUILT.
SO IT'S ALWAYS GONNA BE TECHNOLOGY BASED, RIGHT? SO I MEAN YEAH, THEY COULD UP AND LEAVE, BUT IT'S GONNA NEED SOMETHING IT TO PARTNER WITH THAT.
SO IT'S GOTTA GO HAND IN HAND.
I MEAN I GUESS THEY WANTED TO, TO LEAVE AND LEAVE IND WAREHOUSES AND PUT LIKE STORAGE.
I GUESS THEY COULD DO THAT, BUT
THE BPP, THAT'S A ONE DATE, THAT'S A JANUARY 1ST.
THAT'S AS OF JANUARY 1ST EVERY YEAR.
SO IF YOU, IF YOU LEAVE AN EMPTY BUILDING ON JANUARY 1ST, YOU'VE GOT NO RENDITION.
YOUR RENDITION IS DUE IN APRIL.
FOR, UM, JANUARY FOR PROPERTY.
SO YOU CLEAR OUT YOUR OLD STUFF IN DECEMBER AND THEN YOU PUT YOUR NEW STUFF IN STARTING JANUARY 2ND, YOU'VE GOT ZERO B PPP FOR THAT YEAR BECAUSE IT WAS NOTHING WAS THERE ON JANUARY 1ST.
YOU EMPTY THE BUILDING IN DECEMBER TO PUT NEW STUFF IN.
THEN JANUARY 2ND YOU START BRINGING IN THE NEW EQUIPMENT.
THERE'S NO B PPP FOR ONE YEAR ON THAT.
IF YOU TIME IT, YOU CAN, YOU CAN AVOID B PPP ON NEW EQUIPMENT FOR A YEAR BASICALLY.
YEAH, BUT I DON'T KNOW HOW THE SERVER, I DON'T KNOW HOW A SERVER FARM, WELL YOU'RE NOT GONNA DO A WHOLE BUILDING LIKE THAT, BUT YOU CAN DEFINITELY WELL, DAN SAYING IS NO ONE'S MOVING EQUIPMENT IN THIS YEAR.
IT'LL BE NEXT JANUARY, THE FIRST WEEK OF JANUARY THEY'LL BE MOVING.
NO, I I BUT WHAT HE'S SAYING IS LIKE THERE COULD BE EQUIPMENT THERE THAT THEY'RE GONNA REPLACE, SO THEN THEY TAKE IT OUT IN DECEMBER.
SO WHEN JANUARY ONE HITS SHUT IT'S NOT THERE AND THEN THEY PUT THE NEW SERVERS IN, SWITCHING OUT TO SOMETHING, THEY'RE TAKING SOMETHING OFFLINE AND PUTTING SOMETHING NEW ONE.
THEY TAKE IT OFFLINE RIGHT AS THEY PUT THE NEW ONE IN.
THERE'S A CONTINUITY OF OF OPERATIONS.
OH MY GOD, CUSTOMER UNTIL YOU HAVE NO INTERNET WORKING.
YOU KNOW, CONCERNING ABOUT IF WHEN THEY FILE THEIR RENDITION, HOW MUCH, ACTUALLY HOW MUCH VALUE ARE THEY ACTUALLY REPORTING? YOU MAY CONSIDER WRITING IN YOUR AGREEMENT.
THE CITY OF HU COULD FI COULD HIRE MARSHALL AND SWIFT THEMSELVES TO SAY, I WANT YOU TO DETERMINE A VALUE FOR THESE SERVERS IN THIS BUILDING FOR US EVERY YEAR.
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MM-HMM.UM, AND, AND HAVE, UH, AND THE AGREEMENT HAVE A, HAVE AN INDEPENDENT, YOU KNOW, APPRAISAL DONE.
VALUE BECAUSE IT'S JUST THEM, THEM USING AND LOOK THE, THEY'RE REPORTING TO THE APPRAISAL DISTRICT.
THE APPRAISAL DISTRICT'S GONNA MAKE A DETERMINATION.
THE FEDERAL TAX CODE WILL LET US DEDUCT ALL OF OUR DEPRECIATION ONE YEAR.
IS THERE ANY FOLLOW UP ON THAT OR IS IT JUST KIND OF TAKEN FOR FACE VALUE? UM, MAYBE TO CONSIDERING THE COMPLEXITY OF IT, IT, THE APPRAISAL DISTRICT IS PROBABLY RELYING ON MARSHALL AND SWIFT TO, TO GIVE A HIGH FIVE ON, ON THE, THE VALUE THAT'S BEEN RENDERED.
YEAH, THAT WAS THE CONFIRMATION FROM THE UM, BUT THE QUESTION THEN IS, IS MARSHALL AND SWIFT WALKING THAT BUILDING? EXACTLY.
TYPICALLY WHAT THEY DO IS, EH, UH, DATA SERVERS OF THIS SIZE OF A BUILDING THIS SIZE SHOULD HAVE ABOUT THIS MUCH VALUE IN THEM.
WANT SOMEONE WALKING WITH A CLIPBOARD.
YOU'RE, ANY QUESTIONS BEFORE WE UH.