ECONOMIC DEVELOPMENT INCENTIVE UPDATE
At Tuesday’s work session, the Fort Worth City Council received an informal report with an overview of the incentive compliance review process for economic development incentive agreements and results for Tax Year 2018.
The purpose of the review is to determine compliance with each requirement of the agreement and calculate the percentage of taxes to be abated or reimbursed to the company based on compliance achieved. This year staff reviewed 10 tax abatement and 31 economic development program (Chapter 380 Grant) agreements. Results also include one relocation tax abatement.
“Overall, I think the report shows that the incentive program is generating the net benefits we anticipated from these projects. Our overall program has leveraged $3.5 billion in private capital investment and has led to the creation or retention of several thousand jobs,” Fort Worth Economic Developer Robert Sturns said. “There is still some softness in the market when you look at the MWBE participation, but I believe with the changes we made to our policy, we will start to see those numbers of committed versus actual spend get closer in alignment.
“From an economic development standpoint, we strive to be very transparent in the projects we do and the benefits that are derived from investing the public dollar in these developments. The annual audit is one way to ensure that these investments are for the right types of projects that can benefit our community.”
Two of the Chapter 380 Grants involved project completions: the expansion at Clearfork Development and the Tanger Outlets construction. Total capital investment for Clearfork ($58.5 M) and for Tanger Outlets ($86.6 M) was approximately $145 million. Clearfork earned 68.71% out of the available 70% construction incentive and Tanger Outlets earned 91.72% out of the available 100% construction incentive.
In addition to requirements for minimum dollar amounts of construction investment, incentive agreements generally tie a portion of the possible incentive to participation by Fort Worth Businesses and Fort Worth Minority and Women Business Enterprises. Both Clearfork and Tanger did not achieve the maximum construction incentive due to shortfalls in expected participation by Fort Worth MWBE companies. However, the overall gap between expected MWBE construction participation and actual performance was reduced by approximately 33% year over year, so the trend is moving in a positive direction.
For Tax Year 2018, Fort Worth and Fort Worth MWBE’s received over $180 million in construction spending from economic development projects.
In addition to construction spending, employment and business supply and service participation are key ongoing requirements for the economic development agreements. The results of these categories for Tax Year 2018 are:,
*2018 employment – Overall: 11,169 committed, 13,554 verified. Fort Worth jobs: 3,799 committed, 4,902 verified. Central city jobs: 1,097 committed, 1,434 verified.
*2018 business supply and service – Fort Worth businesses: $42,408,470 committed, $110,074,644 verified. Fort Worth MWBE $26,639,381 committed, $10,711,202 verified.
Businesses with active agreements in 2018 provided the following tax revenue to the city:
*Real and business personal property and sales – $18,358,405 net.
*Hotel occupancy tax (7% plus 2%) – $510,543.
The City of Fort Worth’s 2018 net assessed value – real and personal property – is $60.9 billion. City property taxes received were an estimated $477.8 million, and sales taxes were an estimated at $231.9 million, for a total of $709.7 million in total taxes.
For tax year 2018 property taxes abated or reimbursed totaled just over $22 million, which represents 3.1% of the city’s total tax revenue. In addition, the city collected $29.1 million of hotel occupancy tax, of which $3.8 million, or 13.3%, was reimbursed.
The private investment leveraged by the economic development program totaled $3.5 billion, making the city’s total incentive participation 0.73%, resulting in a private to public investment ratio of 137:1.