A San Antonio-based public energy company is offering local taxing entities millions of dollars in lieu of property tax payments for a pair of area power plants.
The city of Corpus Christi took CPS Energy up on it Dec. 9. The City Council gave the nod to move the proposal forward to an agreement.
Online documents show CPS Energy offering about $1.8 million to the city following the purchase last year of the Barney Davis and Nueces Bay power plants.
Because CPS Energy is considered a governmental entity, its acquisitions made the power plants exempt from property tax, a move criticized by some local taxing entities as taking millions of dollars off the rolls.
Combined, they were appraised at about $151 million in 2024, according to Nueces County Appraisal District records.
City documents show as part of a preliminary agreement, CPS would make a total $1.8 million payment with the understanding that the funding would be used as a “credit” mechanism, should the properties become taxable within the next 10 years.
According to the records, CPS Energy would pay in total about $965,000 — staggered over tax years 2024 through 2027 — for the Barney Davis Power Plant, and about $805,000 over the same timeframe for the Nueces Bay power plant.
The settlement is intended, in part, “to mitigate the impact of the sudden loss of revenue resulting from the property’s conversion from private to public ownership,” according to a city memo.
A draft version of the agreement states that the city would acknowledge that the payments proposed by CPS Energy could potentially be “substantially greater” than what otherwise may be collected if the power plants were taxed.
CPS Energy, meanwhile, would acknowledge that its proposed payments could potentially be “substantially less” than the revenue the city would be able to recover, should the power plants be subject to property tax.
Each “agrees that the sums agreed to be paid by CPS Energy to the City … represent a fair compromise and settlement of any Claims, and that this Agreement is in the best interest of the parties and their respective residents, customers, taxpayers, and ratepayers,” according to the document.
Addressing the council, City Manager Peter Zanoni recommended accepting the offer.
“They’re being a good neighbor by doing that, because they could just pay us zero dollars,” he said.
Letters dated Nov. 26 show similar agreements being offered to other taxing entities — including Nueces County, Del Mar College, the Flour Bluff Independent School District and the Corpus Christi Independent School District — for various amounts, totaling roughly $6.52 million combined.
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This article originally appeared on Corpus Christi Caller Times: CPS Energy offers property tax settlement for power plant purchases
Reporting by Kirsten Crow, Corpus Christi Caller Times / Corpus Christi Caller Times
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