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NEWBERRY – The City of Newberry took a step toward economic growth on Monday, approving a new business tax exemption for a confidential company known as Project Hydro, expected to bring jobs, investment, and innovation to the community.

The measure, passed unanimously by City Commissioners during the Oct. 27, 2025, City Commission meeting, allows the city to grant an Economic Development Ad Valorem Tax Exemption to qualifying new or expanding businesses.

Assistant City Manager and Chief Financial Officer Dallas Lee said the proposal met all state and local criteria. “All applicable requirements under state law and Ordinance No. 2018-20 have been met,” Lee said, referencing the city’s 2018 ordinance that established the guidelines for such incentives.

The Florida Constitution and Florida Statutes authorize local governments to offer tax exemptions to attract new business investment and create jobs, provided such programs are approved by voters. Newberry’s authority to do so originated with a 2017 city referendum, followed by the passage of Ordinance No. 2018-20 a year later.

Under that ordinance, businesses must demonstrate measurable economic benefits such as new job creation, higher-than-average wages, and capital investment.

Though details of the company remain confidential under state law, Project Hydro has represented that it will:

  • Employ at least 50 full-time equivalent workers,
  • Provide average annual wages at least 115 percent above the local average, and
  • Make a significant capital investment in building a new facility within city limits.

The incentive, if all compliance requirements are met, will reduce the company’s City of Newberry ad valorem taxes on improvements and tangible personal property over a nine-year period. The tax break applies only to city taxes — not to those levied by Alachua County, the school district, or other taxing authorities.

Exemption Schedule

The exemption period will begin Jan. 1, 2027, and end Dec. 31, 2034, contingent on the company maintaining its promised jobs and wage levels. The approved schedule phases out over time:

  • Years 1–2: 100 percent exemption
  • Years 3–4: 80 percent exemption
  • Years 5–6: 60 percent exemption
  • Years 7–8: 40 percent exemption
  • Year 9+: 0 percent exemption

Should the business fail to meet those conditions, the city retains the right to revoke the exemption and recover abated taxes.

According to city figures, Newberry’s current ad valorem tax revenue totals $5.28 million. The city anticipates no loss in revenue this fiscal year, since the exemption does not begin until 2027. However, the estimated reduction for the first fiscal year of effect is projected at $203,029.

Despite the short-term impact, officials said the tradeoff is well worth it. The project is expected to expand Newberry’s tax base, diversify employment, and stimulate private-sector growth in the coming decade.

“The City Commission … finds that Project Hydro has met all requirements of Ordinance No. 2018-20 and Section 196.012(15), Florida Statutes,” Lee said. “Granting the exemption will result in an economic benefit to the City of Newberry.”

Commissioners voted unanimously to approve the measure following brief discussion on compliance assurances.

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