Stephenville city administrator seeks to abate Hoffbrau rebate confusion

Stephenville City Administrator Pat Bridges

The Flash Today

Stephenville City Administrator Pat Bridges is hoping to clear up a little economic development confusion before the City Council’s regularly scheduled meeting Tuesday at 5:30 pm.

“I have seen a great amount of misinformation being circulated on social media about what is being offered,” Bridges said. “I am trying to put some of the rumor to rest and perhaps educate as to exactly what this incentive is, and what is being offered.”

Originally a deal with Hoffbrau Steaks (Highway 377 LLC) was discussed that would have been a 10-year sliding-scale tax rebate. What is now being proposed to council members is a seven-year deal.

The key word being “rebate,” meaning a partial refund and not “abatement,” which is a reduction.  One online pole has been asking if readers are in favor, or not, concerning “tax abatement,” and according to Bridges that is not the issue.

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“Right now we have a building that is generating zero sales tax dollars for the city and it hasn’t been doing so for a good deal of time,” Bridges said. “Highway 377 is asking for a ‘rebate,’ meaning they will pay their sales tax in full and then a portion will be refunded.”

Which means Stephenville isn’t paying a dime or giving up a thing to get Hoffbrau to come into town.

The city would be giving back a rebate, but only after Stephenville actually receives something first. The scales are heavily loaded in Hoffbrau’s favor during the first portion of the seven-year deal being proposed, and the “break-even point” comes in the deal’s fifth year – meaning the city and Hoffbrau would evenly split the sales tax collected.

The final two years roll the rebate’s percentage amounts into the city’s favor and ends after year seven.

Another key factor to the deal, suggested by Councilwoman Sherry Zachery (owner of Santa Fe Taco Company), is placing a cap on the rebate at $2.2 Million. That means all sales tax collected above that mark will go to Stephenville with no further rebate.

Based upon the $2.2 Million cap, a total of $187,500 in sales tax would be collected. Stephenville’s portion of that sales tax would be $30,250. In the first year of the deal $27,225 would be returned to Hoffbrau and the city would retain the remaining $3,025.

The lump sum of the rebate over the entire seven years would be $127,050, an average of $18,150. This would be the maximum rebate for Hoffbrau, because of the proposed $2.2 Million cap. All those figures could change if sales don’t reach the cap.

“This is not going to raise anyone’s taxes. This is a sales tax not a property tax,” Bridges said. “We are not giving Hoffbrau anything unless we first receive sales tax dollars.”



Stephenville’s city website has a breakdown of several different sales tax scenarios that show how much money the city would retain and how much of a rebate Hoffbrau would receive.

“I hope this will help people understand this is a sales tax rebate. It’s not a reduction in taxes and the city is not giving up anything without some type of return first,” Bridges said. “We are not using Stephenville Economic Development Authority funds, because the rebate falls under Chapter 380, which is city-controlled funding incentives.”

Click here for a direct link to the charts.

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