Kerrville council weighs scaling Chapter 380 incentives to help small businesses

Kerrville staff on Tuesday told the City Council workshop they want to revise the city's Chapter 380 economic development program so it can offer smaller, tiered incentives aimed at retaining and expanding local small businesses.

Kelly Hagemeyer, a city staff member, told the council that Chapter 380 agreements "authorize municipalities to offer loans and grants of city funds or services at little or no cost to promote state and local economic development and to stimulate business and commercial activities," and that Kerrville's current program was adopted in 2014 and is due for review.

The issue matters because the current program’s eligibility thresholds and minimums were set for larger projects and may exclude smaller, locally owned businesses. Changing the program could let Kerrville offer scaled incentives — for example, tax breaks tied to equipment purchases or modest hiring — that staff say could be tailored to the city’s priorities without obligating the city to provide incentives in all cases.

Hagemeyer summarized the existing program requirements in Resolution 18-24 (2014) and said the current minimum increased taxable value requirement is $200,000. She outlined potential adjustments the council could consider, including lowering or tiering the minimum taxable-value increase, defining what counts as a public benefit or "enjoyment of city services," specifying targeted industries, and allowing pre-permitted projects to qualify under some circumstances.

Several council members asked for clearer legal guidance and for staff to provide a written brief explaining the statutory boundaries of Chapter 380. One council member asked whether the $200,000 threshold is required by state law or a local policy; staff and other participants said the council sets the local threshold but that Chapter 380 of the Texas Local Government Code provides the enabling authority and that the county equivalent is Chapter 381. Dalton (staff member) clarified that the Comptroller of Texas requires reports of Chapter 380 agreements within 14 days of execution.

Todd Bock, representing the Kerr Economic Development Corporation (Kerr EDC), supported revisiting the program and stressed that smaller businesses frequently ask for modest help — for example, $15,000 for equipment or funds to build an e-commerce capability — and currently have limited local options. "The very question you'll find when you sit down with a prospect or a local business is, 'What do you have for me?'" Bock said.

Council members discussed trade-offs: some favored lowering threshold amounts to help local startups and contractors, while others warned about overextending city resources and emphasized the need for measurable public benefit and payback or performance benchmarks. One council member suggested staff provide concrete proposal options with guardrails so the council could evaluate cost, administrative burden and how many small awards the city could reasonably manage.

Staff said the goal of the current workshop was educational — to ensure council members understand how Chapter 380 tools work and to solicit direction on what parameters to test. Hagemeyer said staff recommends creating a scalable Chapter 380 program that would allow the city to consider smaller projects alongside larger developments.

The council did not take formal action. Staff said it would return with the existing program document and with draft revisions and legal guidance for council review.

Looking ahead, Hagemeyer said the city will also present a separate workshop in two weeks on Chapter 312 incentives. Council members asked staff to identify specific proposal options and the legal framework before a final policy revision is drafted.