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Dallas-area = cities stick=20 with incentives in bid to create jobs, but downturn hinders efforts=20
11:06 PM CST on = Sunday, February=20 1, 2009
Plano fell victim to the worsening economy last fall when a city = incentive=20 deal to lure video game developer Ensemble foundered.
But instead of scuttling the deal, the Plano City Council is keeping = the=20 incentives on Ensemble's empty office space to offer to a new tenant. =
The decision highlights the increasingly desperate straits facing = cities=20 across North Texas as they seek to create jobs and spur new business = activity in=20 the midst of a bad economy.
Leaders in McKinney are mulling the future of a stalled convention = center and=20 hotel project. A few large-scale projects in Dallas have halted despite = millions=20 in public financing. Irving may offer tax breaks to ailing retailers for = the=20 first time ever. And incentive deals in the early stages have fallen = through in=20 Arlington.
"We've definitely seen a slowdown," said Robert Sturns, Arlington's = economic=20 development manager.
City halls have emphasized job creation in recent years, pouring = millions of=20 public dollars into tax incentives, marketing blitzes and sophisticated=20 recruitment efforts to lure new firms to town.
Yet with the economy faltering, budgets tight and the competition for = new=20 jobs more cutthroat than ever, cities are having a harder time closing = deals=20 despite offering sweeteners such as tax breaks and upfront cash.
'No surprise'=20
"When you're in a serious downturn like today, it is no surprise that = many=20 economic development projects are not proceeding," said Bernard = Weinstein, an=20 economics professor at the University of North Texas.
Hopeful business leaders point to evidence that Texas' economy has = held up=20 better than the rest of the nation.
Job losses are rising but remain lower than elsewhere. And Texas = housing=20 prices have not witnessed precipitous drops like in other states.
"Texas as a whole is consistently outperforming the rest of the = nation," said=20 Lyssa Jenkens, vice president of business research at the Dallas = Regional=20 Chamber of Commerce.
Still, the region is hardly immune to the downturn.
"What we are experiencing is wide and deep and impacting everyone," = said=20 James Brooks, an expert in economic development with the National League = of=20 Cities in Washington, D.C.
Last May, Plano offered Ensemble about $230,000 in incentives, = including a=20 seven-year property tax break, to relocate to Plano's Shops at Legacy. =
In exchange, Ensemble, owned by Microsoft, agreed to bring 120 jobs = and add=20 more than $10 million to the city's tax rolls. The deal died in = September, when=20 Microsoft shuttered Ensemble before the incentives were to kick in.
Rather than let the agreement expire, the City Council has given = Shops at=20 Legacy developer Fehmi Karahan until August to find a new tenant to = receive the=20 incentives. City leaders say they expect a new deal soon.
Denise Tacke, Plano's finance director, said the intent was to make=20 Ensemble's empty office more attractive to buyers.
The stakes are high for Plano and other communities. Cities often tie = tax=20 breaks and other incentives to a company's performance, such as jobs = created.=20 Sometimes efforts can backfire.
Empty plant=20
In perhaps the most notable recent example, state and local officials = showered Texas Instruments with a combination of tax breaks and = incentives worth=20 an estimated $300 million to build a massive computer-chip factory in=20 Richardson.
The company promised to bring at least 1,000 jobs and move $2.5 = billion worth=20 of equipment to the factory. One study predicted the plant would spawn = 75,000=20 new jobs in the area.
But the plant has remained empty since construction ended in 2006. = Earlier=20 this week, Texas Instruments announced large-scale job cuts.
Despite the rough economic terrain, officials in several cities say = interest=20 in the region remains strong. Although it lost Ensemble, Plano has = clinched=20 incentive deals with several new businesses in recent months.
Since Oct. 1, the Fort Worth Chamber of Commerce has received = inquiries from=20 25 companies seeking to relocate, up "significantly from last year," = said Bill=20 Thornton, the chamber's president and CEO.
Thornton and others believe that cutting back on job creation efforts = now=20 would be a mistake.
"During low economic times, we have to market more," said Chris E. = Wallace,=20 president and CEO of the Greater Irving Las Colinas Chamber of Commerce. = "But=20 when activity comes back, we're going to be ahead of the game."
SWEETENING=20
THE POT
As the economy gets worse, cities are struggling to revamp incentive = offers=20 in an effort to continue to lure businesses and jobs. Here are a few = examples:=20
Arlington has trained much of its efforts on retaining = existing=20 businesses rather than attracting new ones.
Dallas has pledged more than $10 million toward redeveloping = four=20 office towers that formerly held Atmos Energy. The redevelopment project = has=20 been delayed.
Irving has never offered tax incentives to retailers. But city = officials say that could now change.
McKinney committed about $16 million in public funds for a = convention=20 center and hotel project that has stalled. Officials are considering = pledging an=20 additional $5 million.
Plano opted to keep an incentive package in place for an empty = office=20 after its prospective tenant, Ensemble, canceled plans to move to Plano. =
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