Denton has spent about $6.5 million of its sales and property tax revenue in the past 10 years luring new employers and retailers. In exchange, those incentives have netted about 3,680 additional jobs and about $23.6 million more in taxes for the city, according to a new city report.
Aimee Bissett, the city’s economic development director, presented the report to the City Council during a workshop session Tuesday afternoon. It was the second update of a 10-year, “return-on-investment” analysis the department first undertook in 2009 related to its incentive agreements.
The department’s 12-page report has already been presented to the Denton Chamber of Commerce and the city’s Economic Development Partnership board, Bissett said.
Denton began offering economic incentives under its current model in 1998. Currently, the city has three kinds of agreements with 11 businesses in town. Another six agreements have been inked and will become active when those businesses — Target, Peerless Manufacturing, Mayday Manufacturing, Labinal/Safran, Golden Triangle Mall and Phase 2 of Rayzor Ranch — meet the requirements that trigger payment of the incentives.
Seven corporations have made agreements with Denton for property tax abatement, which have cost the city $1.6 million in the past 10 years for a net gain of about $4.1 million in property taxes. United Copper Industries was the first corporation to enter into an incentive agreement with Denton in 1998, but the company has never employed enough people at its Denton plant to be able to claim all of its 25 percent abatement, city records show.
Peterbilt, Fastenal, Aldi and Flowers Foods have current agreements. Once they meet the requirements, agreements with Target and Peerless call for 65 percent and 40 percent property tax abatement, respectively, over the next five to six years.
Bissett told the City Council that corporations from out of state tend to prefer abatement agreements, which forgive a certain portion of the property tax bill for a limited period of time.
“They are more comfortable with abatement than with Chapter 380 agreements,” Bissett said.
Named for the Texas government code that authorizes them, Chapter 380 agreements authorize cities to rebate either sales or property taxes, or both, once requirements are met.
Of those agreements that rebate property taxes, Denton has refunded about $640,000 in the past 10 years, netting the city about $1.4 million in new property taxes. One of the incentive agreements, made with Granite Properties, was transferred to Schlumberger, when the French-owned oilfield service company bought part of Granite’s property on Denton’s west side in 2012.
Sally Beauty Supply and Jostens also have current property tax rebate agreements. The city’s new agreements with Mayday and Labinal could see rebates on about $8 million in property values in the next 10 years, if the companies meet the city’s requirements.
Denton also has agreements to rebate some sales taxes with the owners of some shopping centers, including Denton Crossing, Unicorn Lake and Rayzor Ranch. Those have cost the city about $4.2 million, ostensibly netting about $14.4 million in new sales taxes. The city recently agreed to sales tax rebates for Golden Triangle Mall after the new owners invested at least $45 million in renovations and updates. In addition, phase two of an agreement with Rayzor Ranch has not yet triggered rebates.
Council member Kevin Roden questioned whether some of the increases in sales taxes claimed by those shopping centers may be offset by losses of sales tax elsewhere in the city.
Bissett said she has noted that sales tax collection at Denton’s main shopping centers tends to trend up or down together, but because the staff has to compile sales tax data manually — and has only done that for the shopping centers — no further detailed analysis was available.
Roden also asked about a directive the council had given previously — were prospective businesses expected to meet some threshold for good-paying jobs before collecting incentives?
Bissett said they were not, although some employers might get more points toward their reimbursement requirements with higher-paying jobs.
“The kinds of jobs we are creating — that is an important question to answer,” Roden said.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.
BY THE NUMBERS
The city of Denton currently has 11 incentive agreements with area businesses, meant to bring new jobs and foster other economic development. Below is a tally of what the incentives cost for the last two years against the taxable value the businesses have brought. In addition, city leaders count 3,680 new jobs as a result of the agreements as of 2012.
Total of all incentives
Property values (cumulative)
Property taxes (cumulative)
Sales taxes (cumulative)
SOURCE: City of Denton, Economic Development Department